The burgeoning single-bond ETF space is set to grow this week as investors continue to look for ways to navigate the Federal Reserve’s rate hikes. F/m Investments is launching the U.S. Treasury 12-month Bill ETF on Tuesday, president and CIO Alexander Morris told CNBC. The fund will trade under the ticker OBIL. The first three funds in this series launched in August , consisting of 3-month, 2-year and 10-year products. The two short-term products have been big hits with investors, with each raking in more than $130 million of inflows in three months. “With three-months, 12-months and 2-years, we felt we had enough of the front end of the curve that we got all of the juicy parts. And then we’ll come back and get the six-month in, and then in Q1 of next year we’ll start to ease in to the middle part of the curve as interest rates start to stabilize,” Morris said. The 10-year has seen slower pickup, with about $10 million of inflows, as investors have gravitated assets with shorter duration as the Fed hikes interest rates. Morris said at least one client pulled out of that fund and moved into a short-term one. The F/m single Treasury funds all have an expense ratio of 0.15%. The funds work by frequently buying and selling newly issued Treasurys, keeping the years to maturity holdings close to the timeframe on the label. This differs from older funds that target a wider range of Treasurys, or some others that may hold the bonds until maturity. These funds let investors target narrow parts of the yield curve. With the Fed hiking rates rapidly in 2022, the curve has become inverted, making short-term yields more attractive for many investors. New fixed income ETFs have entered the market at a historic pace in 2022 , as the rising yields and decline in equities have made investors hungry for income.
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