Going To Try US-T Bills

[revhappy]

Actually would it also make sense to buy a ETF that holds US T bills or short term govt bonds?

With T-bills you have more flexibility, you can choose the exact maturity and hold it till maturity and get more predictable returns.

 

[BBCWatcher]

Actually would it also make sense to buy a ETF that holds US T bills or short term govt bonds?

What's your objective?

 

[gnooliew]

Just wondering if the same purpose of taking advantage of the rising interest rates in US treasuries in the near term would be replicated in the ETFs, and do not have to keep paying commissions to re-purchase at T bill maturity. However, I do note from a quick search of UCITS holding such underlyings do not seem to be at the same level of yield, probably due to the bulk of the AUM holding old dated treasuries that are at lower yield which have yet to catch up to current yield.

 

[revhappy]

Just wondering if the same purpose of taking advantage of the rising interest rates in US treasuries in the near term would be replicated in the ETFs, and do not have to keep paying commissions to re-purchase at T bill maturity. However, I do note from a quick search of UCITS holding such underlyings do not seem to be at the same level of yield, probably due to the bulk of the AUM holding old dated treasuries that are at lower yield which have yet to catch up to current yield.

Your last line is not true. When yields rise, older bonds fall in price and then the yield on them becomes higher because you are buying it cheaper.

Always remember in fixed income, yield is a derivative of price and not the other way around. So it is easier if you think in terms of price than the yield.

Also, regarding commission, it costs 0.2bps to buy and 0.2bps to sell. That is like for a $100k order $2 per order.

 

[reddevil0728]

Your last line is not true. When yields rise, older bonds fall in price and then the yield on them becomes higher because you are buying it cheaper.

Always remember in fixed income, yield is a derivative of price and not the other way around. So it is easier if you think in terms of price than the yield.

Also, regarding commission, it costs 0.2bps to buy and 0.2bps to sell. That is like for a $100k order $2 per order.

for t-bill? it's more like min is $5

 

[SiGendut]

study FATCA and Form 1042-S first

 

[reddevil0728]

study FATCA and Form 1042-S first

Why ah?

 

[SiGendut]

Why ah?

in SG people already used to, and taken for granted, investment gain without tax.
4% interest, means 4%

in the us if I'm not wrong, need to register with form W-8, any interest received is taxable, so if rate is 4% the nett received is not purely 4% but minus tax


(edited)
nevermind,
just read the comment from BBC Watcher in page 1, from here we can use the "wrapper" which in turn not necessarily pay the tax. but I suppose it's not free to use such "wrapper" services.
...the FATCA has many individual context, need to dig deeper and study more, really.

 

[revhappy]

Maybe we can see some UK based blogs/videos who explain how to buy T bills as a foreigner.

 

[BBCWatcher]

in SG people already used to, and taken for granted, investment gain without tax.
4% interest, means 4%
in the us if I'm not wrong, need to register with form W-8, any interest received is taxable, so if rate is 4% the nett received is not purely 4% but minus tax
(edited)
nevermind,
just read the comment from BBC Watcher in page 1, from here we can use the "wrapper" which in turn not necessarily pay the tax. but I suppose it's not free to use such "wrapper" services.
...the FATCA has many individual context, need to dig deeper and study more, really.

U.S. Treasuries (directly held) are U.S. tax free when held by non-U.S. persons not engaging in a U.S. trade or U.S. business (when the income is “not effectively connected” to the U.S.) Yes, your broker will likely require IRS Form W-8BEN, but there shouldn’t be any withholding for U.S. Treasuries.

 

[milkfish]

Just wondering if the same purpose of taking advantage of the rising interest rates in US treasuries in the near term would be replicated in the ETFs, and do not have to keep paying commissions to re-purchase at T bill maturity. However, I do note from a quick search of UCITS holding such underlyings do not seem to be at the same level of yield, probably due to the bulk of the AUM holding old dated treasuries that are at lower yield which have yet to catch up to current yield.

Looked into this. Not profitable because the ETF payout as dividend and that is taxed 30% for US based ETF. Also management charges a fee. If 100k+ I think better ownself buy.

I compared even short dated UST ETFs like SHV (or its UCITS equivalent IB01), still yield is way lower than actual TBill. Old dated treasuries should not matter as those short dated funds are supposed to hold only bills shorter than 1 year. Buy and sell ETF also got spread and comission, so for me not interesting at all last time I checked.

 

[revhappy]

I just deposited 80k SGD into IBKR and converted it to USD@ 1.3667.

Now waiting for the FX conversion to settle, I guess it takes 2 days and then I will buy the T bills.

 

[reddevil0728]

I just deposited 80k SGD into IBKR and converted it to USD@ 1.3667.

Now waiting for the FX conversion to settle, I guess it takes 2 days and then I will buy the T bills.

why need to settle then buy?

 

[homer123]

I just deposited 80k SGD into IBKR and converted it to USD@ 1.3667.

Now waiting for the FX conversion to settle, I guess it takes 2 days and then I will buy the T bills.

A bit late... all T-bills and bonds are rallying tonight

 

[revhappy]

A bit late... all T-bills and bonds are rallying tonight

The 10Y bond rallied, but the 1Y fell.

https://www.cnbc.com/quotes/US1Y
We can lock in USD cash@4.75% for 1yr.
I think this is a pretty good deal.
If inflation continues to rise next year then this bond's yield will fall and we will make losses, but then stonks should crash like 20%. But if inflation cools off as expected, stonks are anyways overvalued, we should end the next year around the current levels for S&P500 and this bond will give you risk free 4.75%

 

[revhappy]

I just placed an order to buy the US 6 month T Bill Jun 1st 2023 maturity. I placed mid point price between the bid and ask. But my price doesnt appear in the bid. I guess, the bid/ask only shows prices from the large >1million order size. So I am not sure if my order will even get executed.

 

[homer123]

I just placed an order to buy the US 6 month T Bill Jun 1st 2023 maturity. I placed mid point price between the bid and ask. But my price doesnt appear in the bid. I guess, the bid/ask only shows prices from the large >1million order size. So I am not sure if my order will even get executed.

Haha, I just bought US treas ETF maturing 2023 in my previous 401k account which is restrictive in purchasing individual equities or bonds.

 

[reddevil0728]

I just placed an order to buy the US 6 month T Bill Jun 1st 2023 maturity. I placed mid point price between the bid and ask. But my price doesnt appear in the bid. I guess, the bid/ask only shows prices from the large >1million order size. So I am not sure if my order will even get executed.

Did you sub data? If not your midpoint may not be the most updated and may not be filled since it’s quite high volume.

just do market order? Since liquidity quite high

 

[revhappy]

Did you sub data? If not your midpoint may not be the most updated and may not be filled since it’s quite high volume.

just do market order? Since liquidity quite high

It was saying it is realtime consolidated. Today I will try slightly higher price.

 

[reddevil0728]

It was saying it is realtime consolidated. Today I will try slightly higher price.

Yea it’s not really.