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Post by Admin/YBB on Aug 17, 2023 13:36:55 GMT -6
Treasury FRNs
There is growing interest in Treasury FRNs. These didn’t do much during the ZIRP, 2020-22, but have done well after 2022 as interest rates rose. The 2-yr Treasury FRNs pay the yield of 3-mo T-Bills (reset weekly) plus spread (set at the Auction). The interest accrues daily but is paid quarterly. These require less frequent rolling than 3-mo T-Bills. Auctions (original issue or reopening) are monthly. Among the brokers, Schwab accepts online orders, but you will have to call Fidelity’s fixed-income desk to enter Auction or secondary market orders. www.treasurydirect.gov/marketable-securities/floating-rate-notes/ The next Treasury FRN Auction (reopening) is on Wednesday, 8/23/23. www.treasurydirect.gov/instit/annceresult/press/preanre/2023/A_20230817_2.pdf The ETFs are TFLO, USFR; both have 15 bps ERs These can be good supplements for T-Bills or money-market funds. Don’t confuse these with regular FR/BL funds that are junk-rated/HY. In between are the investment-grade corporate floating-rate notes.
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