Government Exchange Traded Funds

The main focus of government exchanged traded funds is government debt securities/bonds, and there are a few different types of those. Government bonds are generally considered to be one of the safest investments a person can make when it comes to securities. Exchange Trade Funds or simply ETFs provide investors with a portfolio of bonds in low-expense funds with make for very easy trading. The entire year of 2010 and into 2011 the interest rate for government securities was at a record low. Those investors which were seeking a safe investment in the form of government securities sometimes experienced rates that were below one percent. The question that investors have to ask themselves is whether government bond ETFs are going to be the best to choose for a profitable return when interest rates start to increase again.

There is always the option of looking into Treasury Bond ETFs which are essentially notes and bonds with direct debt obligations that the U.S Treasury and Federal government hold. One of the reasons that so many people are choosing these is because of the fact that they are typically considered to be safe and are completely expect from state income taxes which is certainly a bonus to think about if you are looking for your next good investment. These securities are classified as bonds, bills, or notes and have a maturity length which goes up to thirty years.

Barclays’ iShares group has a corner on the market for Treasury bound ETFs and provide a wide variety of choices for those who are looking to diversify their portfolio. No matter what your particular needs are you should be able to find what you need here. You will be able to go online and find a list of iShares Treasury ETFs so you can educate yourself on all of the details. The more you know when it comes to treasury bonds and securities the better your overall investment will be and the more money you will make over time.

You will also want to consider agency and mortgage securities. There are certain other U.S agencies which are authorized to issue debt securities and a vast majority o agency debt consists of mortgage-backed securities or simply MBS; these securities are issued by Fannie Mae, Ginnie Mae, or Freddie Mac. Although agency debt is government-backed in one form or another, it still pays off a significantly higher interest rate than Treasury debt which is why so many people are starting to look into investing in these. iShares leads the way in this type of ETF as well and the AGZ Barclays Agency Bond Fund yields a total amount of 1.74% as well as the MBB fund which yields 3.85%.

Those who wish to compare the risk and rates of certain funds will want to think about looking at their individual reported durations. AGZ happens to have a total duration of over three years and MBB reports have a duration of almost three and a half years. Treasury bond funds of 3-7 years have a duration of approximately four and a half years. If a fund has a short duration it means that the price of shares will decrease a little bit less if increase rates continue to increase. Most agency bond ETFs have a shorter average duration along with a higher distribution yield which can make for a good overall investment.

There are a number of tips that you will want to remember when you are thinking about getting involved with government exchange traded funds, such as paying attention to the duration and interest rate for each one so you will be able to decide for yourself whether it is something that you will want to spend your money on. Treasury Inflation Protect Securities or TIPS is issued by the U.S Treasury and all of their principal values are adjusted for the rate of inflation, whatever it happens to be. The amount of interest that is paid always increases with the rate of inflation and they have become extremely popular with investors from all over.

Those who are seeking protection from overly high inflation rates are seeking cover with these TIPS which can provide a measure of comfort in financially unstable times. The iShares TIPS fund has an impressive $19 billion in total assets and the closest competition to this is SPDR Barclays Capital TIPS ETF which has $360 million in total assets. As an investor it is important to consider these TIPS and government exchange traded funds before making a final decision.

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