Designed to provide broad exposure to the Government Bond ETFs category of the market, the Invesco Equal Weight 0-30 Year Treasury ETF (GOVI – Free Report) is a smart beta exchange traded fund launched on 10/11/2007.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors–think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting–not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $986.62 million, making it one of the average sized ETFs in the Government Bond ETFs. This particular fund seeks to match the performance of the ICE 1-30 YR LADDERED MATURITY US TRSR ID before fees and expenses.
The ICE 1-30 Year Laddered Maturity US Treasury Index is designed to track the performance of up to 30 U.S. Treasury Notes or Bonds representing the annual February maturity ladder across the yield curve.
Cost & Other Expenses
When considering an ETF’s total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.15% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.57%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, United States Treasury Note/bond-3.12%-02-15-2042 (912810QU5) accounts for about 3.40% of total assets, followed by United States Treasury Note/bond-1.50%-02-15-2030 (912828Z94) and United States Treasury Note/bond-3.12%-02-15-2043 (912810QZ4).
Its top 10 holdings account for approximately 33.8% of GOVI’s total assets under management.
Performance and Risk
So far this year, GOVI has lost about -0.41%, and is down about -1.72% in the last one year (as of 01/07/2025). During this past 52-week period, the fund has traded between $26.69 and $29.71.
The fund has a beta of 0.19 and standard deviation of 9.72% for the trailing three-year period. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Equal Weight 0-30 Year Treasury ETF is not a suitable option for investors seeking to outperform the Government Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Long-Term Treasury ETF (VGLT – Free Report) tracks Bloomberg Barclays U.S. Long Government Float Adjusted Index and the iShares 20+ Year Treasury Bond ETF (TLT – Free Report) tracks ICE U.S. Treasury 20+ Year Bond Index. Vanguard Long-Term Treasury ETF has $10.73 billion in assets, iShares 20+ Year Treasury Bond ETF has $49.76 billion. VGLT has an expense ratio of 0.04% and TLT charges 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Government Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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