What is SHV? How to Buy SHV on uSMART?

This article introduces the iShares Short-Term U.S. Treasury Bond ETF (code: SHV).

 

What is Treasury Bond ETF?

A Treasury Bond ETF refers to an exchange-traded fund with treasury bonds as underlying assets. Similar to traditional stock ETFs, it allows investors to indirectly participate in the bond market. Treasury Bond ETFs typically represent a portfolio of sovereign and municipal bonds, enabling risk diversification and stable returns.

Differences Between Treasury Bonds and Government Bonds:

1. Issuer:Treasury bonds are issued by entities other than the government, while government bonds are issued by the government.
2. Purpose:Treasury bonds are usually used for corporate financing or institutional funding, while government bonds are used for government funding.
3. Repayment Method:Treasury bonds typically repay interest at agreed-upon times and rates, with principal repaid at maturity. Government bonds may have various repayment structures.
4. Risk and Returns:Differences in issuer and purpose contribute to variations in risk and returns between treasury bonds and government bonds.

Both types are bond instruments, and investors should choose based on their investment goals and risk tolerance.

 

What is SHV?

The iShares Short Treasury Bond ETF (SHV) is issued by iShares, aiming to track the performance of the Barclays U.S. Short Treasury Bond Index. Established in 2007, SHV invests in U.S. Treasury bonds with remaining maturities between one month and one year. Over half of SHV's portfolio consists of U.S. Treasury bonds, with the remainder in cash and derivatives. It provides a convenient way for investors to indirectly invest in the short-term U.S. Treasury bond market, offering lower risk and relatively stable returns.

Advantages of SHV:

• Low Risk:SHV primarily invests in short-term U.S. Treasury bonds, featuring a lower risk profile.
• High Liquidity:As an ETF, SHV can be traded on the exchange with high liquidity, allowing investors to buy and sell at any time.
• Stable Income:Due to its investment in short-term government bonds, SHV offers relatively stable returns, suitable for income-focused investors.
• Preservation Characteristics:SHV's portfolio is mainly composed of government bonds, providing preservation characteristics to resist market fluctuations and risks.
• Simple and Convenient:Investors can invest in short-term government bonds through SHV ETF without individually purchasing various bonds, simplifying the investment process.

Disadvantages of SHV:

• Currency Risk:SHV invests in U.S. Treasury bonds, exposing investors to foreign exchange fluctuations, especially for non-U.S. dollar investors.
• Inflation Risk:Investing in fixed-income products like SHV may lead to reduced real returns if inflation rates rise.
• Low Yield Potential:SHV's main investments are in short-term U.S. Treasury bonds, offering relatively lower yield potential, especially in a low-interest-rate environment.
• Market Impact:While SHV invests in low-risk assets, extreme market conditions could still impact its value.

 

Recommended List of U.S. Treasury ETFs:

Code	ETF Full Name	Size (Billion USD)	Expense Ratio	Duration (Years)	Tenure
SHV	iShares Short Treasury Bond ETF	220	0.15%	0.32	Short-term
GOVT	iShares U.S. Treasury Bond ETF	212	0.05%	5.96	Medium-term
VGLT	Vanguard Long-Term Treasury ETF	33.9	0.04%	16.3	Long-term
VGSH	Vanguard Short-Term Treasury ETF	168.4	0.04%	1.90	Short-term
SCHO	Schwab Short-Term U.S. Treasury ETF	99	0.06%	1.90	Short-term

 

Why Choose iShares Short Treasury Bond ETF (SHV)?

• SHV's performance is akin to a short-term cash substitute, with a low-risk, low-return portfolio of U.S. Treasury bonds.
• The fund tracks the ICE U.S. Treasury Short Bond Index, a collection of U.S. Treasury bonds with a remaining maturity of less than a year.
• The fund maintains an AAA credit rating for all held securities, ensuring minimal credit risk.
• SHV's low-risk profile makes it challenging to achieve significant returns, but its potential for capital appreciation is limited.

 

How to Buy SHV on uSMART?

1. Search for the keyword "SHV.US."
2. Select "Trade."
3. Choose "Buy/Sell."
4. Unlock the transaction.
5. Refer to Figure 5 for real-time quotes.

(This diagram is provided for illustrative purposes exclusively)

 

Note: The information provided here is for educational purposes only and does not constitute financial advice. Investors should conduct their research and consider their risk tolerance before making investment decisions.

 

Follow us

Find us on Twitter, Instagram, YouTube, and TikTok for frequent updates on all things investing.

Have a financial topic you would like to discuss? Head over to the uSMART Community to share your thoughts and insights about the market! Click the picture below to download and explore uSMART app！

 

 

Important Notice and Disclaimer:

We have based this article on our internal research and information available to the public from sources we believe to be reliable. While we have taken all reasonable care in preparing this article, we do not represent the information contained in this article is accurate or complete and we accept no responsibility for errors of fact or for any opinion expressed in this article. Opinions, projections and estimates reflect our assessments as of the article date and are subject to change. We have no obligation to notify you or anyone of any such change. You must make your own independent judgment with respect to any matter contained in this article. Neither we or our respective directors, officers or employees will be responsible for any losses or damages which any person may suffer or incur as a result of relying upon anything stated or omitted from this article.

This document should not be construed in any jurisdiction as constituting an offer, solicitation, recommendation, inducement, endorsement, opinion, or guarantee to purchase, sell, or trade any securities, financial products, or instruments or to engage in any investment or any transaction of any kind, nor is there any intention to solicit or invite the purchase or sale of any securities.

The value of these securities and the income from them may fall or rise. Your investment is subject to investment risk, including loss of income and capital invested. Past performance figures as well as any projection or forecast used in this article is not indicative of its future performance.

This advertisement has not been reviewed by the Monetary Authority of Singapore