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iShares Short Treasury Bond ETF | 5% yield and monthly payments – good offer

Current price – $110.5
Target price – $110.5
Dividend yield – 5.04%💵
Investment horizon – less than 1 year
iShares Short Treasury Bond ETF is an exchange-traded fund managed by BlackRock. It invests in short-term US Treasuries, which are perfectly safe. The assets under management (AUM) are $18.7 bln, making it one of the largest funds in its class. In the context of a high level of the Fed key rate, the iShares Short Treasury Bond ETF offers an attractive level of dividend yield (more than 5% per annum) and stable monthly payments.
Investment thesis

🔼 The decision to cut the Fed key rate is postponed. Recent statistical data from the United States has shown that despite the efforts of the Federal Reserve, the inflation in the country is in no hurry to slow down. The Personal Consumption Expenditures price index, which the Fed considers as a priority indicator of inflation, was at the level of 2.8% y/y, almost the same as the previous month. The indicator is above the Fed target of 2%. Against this background, the policymakers tightened their rhetoric, expecting a longer period of high interest rates.

🔼 Short bonds are a safe solution. Expectations of a longer period of high rates are weighing on bond prices, which move opposite to yields. However, the greatest losses are incurred by long-term securities, while this has practically no effect on short-term ones. The iShares Short Treasury Bond ETF currently gives you an opportunity to lock in a high level of profitability with minimal risk and wait for the key rate to decline.

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