Invest in a currency hedged portfolio of US Treasuries.
| 1 month | 3 month | 1 year | 3 year | 5 year | Since Inception | Inception Date |
|---|---|---|---|---|---|---|
| 0.76% | 0.87% | 2.83% | 2.27% | - | 0.56% | 1 July 2022 |
| Management Fee | Performance Fee | Morningstar Total Cost Ratio |
|---|---|---|
| 0.13% | - | 0.19% |
The Global X US Treasury Bond (Currency Hedged) ETF (ASX: USTB) invests in US Treasuries across the yield curve while providing currency hedging.
The Global X US Treasury Bond (Currency Hedged) ETF (USTB) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the iBoxx $ Treasuries Index (AUD Hedged).
Like any government, the US government needs money to fund itself. In order to do this, the United States Department of the Treasury issues debt – sometimes called Treasuries – to finance government spending as an alternative to taxation.
The market for US government debt is the most liquid and deep of any type of financial instrument. As of October 2023, there is more than US$26 trillion in outstanding Treasuries¹. Every day, hundreds of billions of dollars’ worth of Treasuries change hands.
Treasuries are held and used by countless institutions around the world. They often use them to earn a return on their cash in a low-risk way. However, uses are not limited to this. They are also used for analytical purposes, as their yields set the risk-free rate of return.
¹ (SIFMA, 2024) https://www.sifma.org/resources/research/us-treasury-securities-statistics/
The fund is passively managed, and therefore seeks to match the performance of its benchmark index, the iBoxx $ Treasuries Index (AUD Hedged). The index reflects the market of tradable debt (bonds) denominated in US dollars issued by the US government. The index is rebalanced according to a pre-set methodology.
To qualify for index inclusion, bonds must:
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The issuer of units in Global X US Treasury Bond ETF (Currency Hedged) ARSN: 657 948 797 is the responsible entity of the Fund, being Global X Management (AUS) Limited (AFSL 466778) (“Global X”). The product disclosure statement (PDS) for the Fund contains all of the details of the offer of units in the Fund. Copies of the PDS are available from Global X Management (AUS) Limited or at www.globalxetfs.com.au. In respect of each retail product, Global X has prepared a target market determination (TMD) which describes the type of customers who the relevant retail product is likely to be appropriate for. The TMD also specifies distribution conditions and restrictions that will help ensure the relevant product is likely to reach customers in the target market. Each TMD is available at www.globalxetfs.com.au.
The information provided in this document is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information in this document, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant PDS and TMD. Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Global X, the group of companies which Mirae Asset Global Investments Co., Ltd is the parent , or their respective directors, employees or agents guarantees the performance of any products issued by Global X or the repayment of capital or any particular rate of return therefrom. The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance.
The iBoxx $ Treasuries Index (the “Index”) referenced herein is the property of Markit Indices GmbH (“Index Provider”) and has been licensed for use in connection with Global X US Treasury Bond (ETF (Currency Hedged) (the “Fund”). Each party acknowledges and agrees that the Fund is not sponsored, endorsed or promoted by the Index Provider. The Index Provider makes no representation whatsoever, whether express or implied, and hereby expressly disclaims all warranties (including, without limitation, those of merchantability or fitness for a particular purpose or use), with respect to the Index or any data included therein or relating thereto, and in particular disclaims any warranty either as to the quality, accuracy and/or completeness of the Index or any data included therein, the results obtained from the use of the Index and/or the composition of the Index at any particular time on any particular date or otherwise and/or the creditworthiness of any entity, or the likelihood of the occurrence of a credit event or similar event (however defined) with respect to an obligation, in the Index at any particular time on any particular date or otherwise. The Index Provider shall not be liable (whether in negligence or otherwise) to the parties or any other person for any error in the Index, and the Index Provider is under no obligation to advise the parties or any person of any error therein. The Index Provider makes no representation whatsoever, whether express or implied, as to the advisability of purchasing or selling the Fund, the ability of the Index to track relevant markets’ performances, or otherwise relating to the Index or any transaction or product with respect thereto, or of assuming any risks in connection there with. The Index Provider has no obligation to take the needs of any party into consideration in determining, composing or calculating the Index. No party purchasing or selling the Fund, nor the Index Provider, shall have any liability to any party for any act or failure to act by the Index Provider in connection with the determination, adjustment, calculation or maintenance of the Index. The Index Provider and its affiliates may deal in any obligations that compose the Index, and may, where permitted, accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of commercial or investment banking or other business with the issuers of such obligations or their affiliates, and may act with respect to such business as if the Index did not exist, regardless of whether such action might adversely affect the Index or the Fund.
Information current as at 5 December 2023.
About Global X ETFs
Global X ETFs is a leading global ETF provider with a growing range of cost-effective and innovation-led products which are built to help investors and their advisers achieve better investment outcomes. While we are distinguished for our Thematic Growth, Income, and International Access ETFs, we also offer Core, Commodity, and Digital Assets funds to suit a wide range of investment objectives. Explore our ETFs, research, and insights, and more at www.globalxetfs.com.au.
Global X is a member of Mirae Asset Financial Group, a global leader in financial services, with more than US$528 billion in assets under management worldwide.¹ Mirae Asset has an extensive global ETF platform ranging across the US, Australia, Brazil, Canada, Colombia, Europe, Hong Kong, India, Japan, Korea, and Vietnam with almost $100 billion in assets under management.²
¹ Assets under management as at March 2023, Mirae Asset Global Investments
² Assets under management as at June 2023, Mirae Asset Global Investments
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Like any government, the US government needs money to fund itself. In order to do this, the United States Department of the Treasury issues debt – sometimes called Treasuries – to finance government spending as an alternative to taxation.
The market for US government debt is the most liquid and deep of any type of financial instrument. As of January 2022, there is more than US$23 trillion in outstanding Treasuries. Every day, hundreds of billions of dollars worth of Treasuries change hands. Treasuries are held and used by countless institutions around the world. They often use them to earn a return on their cash in a low-risk way. However, uses are not limited to this. They are also used for analytical purposes as their yields set the risk-free rate of return.
USTB is passively managed. It tracks an index of US Treasuries calculated and published by IHS Markit, a subsidiary of S&P Global, and does not seek to outperform its benchmark. The index reflects the performance of tradable US dollar denominated debt issued by the US government. Bonds need to have a maturity of at least 1 year (exposure across the whole yield curve) and a minimum outstanding amount of USD $1 billion per issue
USTB is issued and managed by Global X Australia but gains its exposure to US Treasuries via an ETF issued and managed by DWS. USTB buys and sells units in the European-listed Xtrackers US Treasuries UCITS ETF (Ticker: XUTD), and manages this exposure to ensure the fund tracks the index as closely as possible. XUTD tracks the same index of US Treasuries but is not hedged to Australian dollars. Global X Australia separately manages the currency hedging.
The main attraction of bonds as an asset class is that they provide capital stability and reliable income. This is especially true of US Treasuries. Yet when Australian investors buy unhedged Treasuries, the changing value of the US dollar elevates the risk of capital loss as currencies can move against investors. Additionally, currency fluctuations can swell or shrink income payments. In order to reduce this volatility, and provide more reliable income, we have chosen to use currency hedging for USTB.
The fund can be used to provide a steady return on investment. US Treasuries have provided steady income in all kinds of investment climates for centuries. The appeal of US Treasuries has become more acute in the past 10 years, as many Asian and European countries have experienced sustained near-zero or sub-zero interest rates.
Cheaper access is another advantage of using USTB. Investors can buy US Treasuries directly in some instances. However, trading treasuries directly can come with wider spreads than trading treasury ETFs.
Currency hedging is another benefit. The types of financial instruments used to currency hedge a portfolio – currency forwards – are not easily available to most investors. USTB provides currency hedging, managed by professional traders.
US Treasuries are usually characterised as lower-risk assets. However, they are not without risks. Two key risks include:
Inflation risk. When inflation rises, the value of fixed coupon bonds can fall. This is because inflation erodes the real value of the coupon payments that bonds make. Rising inflation can have the added effect of causing central banks to increase interest rates. Rising interest rates also lower the value of fixed interest bonds.
Interest rate risk. When interest rates rise, prices of debt securities typically fall. (The vulnerability of debt securities to interest rate rises is commonly measured by a statistic called “duration”). This means that changes in monetary policy or guidance by the US Federal Reserve are likely to affect the performance of the fund.
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