GOVT is a total US Treasury bond market ETF from iShares that covers the entire yield curve. But is it a good investment? I review it here.
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GOVT Methodology and Fees
GOVT from iShares is the only ETF I know of for the total US treasury bond market. It launched in late 2012 and has since amassed nearly $22 billion in assets.
GOVT tracks a market-weighted index for fixed-rate US treasury bonds for maturities between 1 year and 30 years. As such, it has an effective intermediate weighted average maturity of about 8 years.
As of 2016, GOVT tracks the ICE US Treasury Core Bond Index. Previously it tracked the Barclays US Treasury Bond Index.
I’ve gone into detail elsewhere about how treasury bonds should probably be preferable to corporate bonds in a portfolio with stocks due to their inherently lower correlation and lower risk profile, among other things. Some may not realize that total bond market funds like BND and AGG contain about 25% corporate bonds.
Bogleheads usually like to stick to broad total market index funds from Vanguard. Unfortunately, Vanguard does not have a total treasury bond market product. GOVT provides a solution for the index investor who wants a total market fund but who also wants to stick to US treasuries instead of the total bond market.
At the time of writing, GOVT has 127 holdings, a 30 day SEC Yield of 3.97%, and an expense ratio of 0.05%.
GOVT Maturity Breakdown
For those who care, here’s the maturity breakdown of GOVT:
Is GOVT a Good Investment?
So is GOVT a good investment? Maybe.
Again, I think GOVT is a great solution for the index investor who prefers to stick with US treasury bonds as opposed to a total bond market fund. Clearly there are many of those, evidenced by the fund’s trillions of dollars in assets. GOVT is also extremely affordable with a fee of 0.05%.
As usual, your effective bond duration should depend on your personal goal(s), time horizon, risk tolerance, and other investments, so GOVT may or may not be suitable for you. As a total treasury market fund, GOVT may be attractive for both the well-diversified young investor and the retiree who needs current income.
Conveniently, GOVT should be available at any major broker, including M1 Financewhich is the one I’m usually suggesting around here.
What do you think of GOVT? Do you own it? Let me know in the comments.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my longer disclaimer here.