Rbb Fund Inc - US Treasury 2 Year Note ETF (UTWO)

US ETF Rbb Fund Inc - US Treasury 2 Year Note ETF Overview

Profile:

The ETF Rbb Fund Inc - US Treasury 2 Year Note ETF, also known as SCHR, is a passively managed exchange-traded fund that seeks to track the performance of the Bloomberg Barclays U.S. Treasury 2 Year Index. This means the ETF primarily invests in U.S. Treasury bonds with maturities of 18 months to 24 months. The ETF has a low expense ratio of 0.03% and is offered by RBB Fund Inc.

Objective:

The primary investment goal of SCHR is to provide investors with exposure to the U.S. Treasury 2-year bond market. It aims to achieve this by closely tracking the Bloomberg Barclays U.S. Treasury 2 Year Index and offering a high degree of liquidity through its listing on major exchanges.

Issuer:

Reputation and Reliability: RBB Fund Inc is a subsidiary of Schroder Investment Management North America Inc., a global asset management firm with a long and established reputation in the industry. Schroder Investment Management has over 200 years of experience and manages over $883.6 billion in assets globally.

Management: The ETF is managed by a team of experienced portfolio managers at Schroder Investment Management. The team has a strong track record in managing fixed income investments, including government bonds.

Market Share:

SCHR has a market share of approximately 0.30% within the U.S. Treasury 2-year bond ETF category. While not the largest, its well-established parent company and low expense ratio contribute to its popularity.

Total Net Assets:

The ETF has approximately $1.4 billion in total net assets as of November 10, 2023.

Moat:

SCHR's key competitive advantage lies in its low expense ratio. With a management fee of only 0.03%, it offers investors a cost-effective way to gain exposure to the U.S. Treasury 2-year bond market. Additionally, the ETF benefits from the strong reputation and expertise of its parent company, Schroder Investment Management.

Financial Performance:

Over the past three years, SCHR has generated an average annual return of 2.50%. This aligns closely with the performance of the Bloomberg Barclays U.S. Treasury 2 Year Index, demonstrating its effectiveness in tracking the target benchmark.

Benchmark Comparison:

SCHR has consistently outperformed the Bloomberg Barclays U.S. Treasury 2 Year Index by a small margin, indicating its ability to generate slightly better returns than the benchmark.

Growth Trajectory:

The growth trajectory of SCHR is closely tied to the performance of the U.S. Treasury 2-year bond market. With rising interest rates, this market segment may experience volatility and potentially lower returns in the short term. However, over the long term, U.S. Treasury bonds remain a relatively safe and stable investment option.

Liquidity:

SCHR exhibits high liquidity, with an average daily trading volume exceeding 100,000 shares. This ensures investors can easily buy and sell their shares without significantly impacting the price. The bid-ask spread is also tight, indicating low transaction costs.

Market Dynamics:

Market dynamics that can affect SCHR include changes in interest rates, economic growth, and inflation. Rising interest rates typically lead to lower bond prices, while economic growth and low inflation can contribute to higher bond prices.

Competitors:

Key competitors in the U.S. Treasury 2-year bond ETF category include:

• iShares U.S. Treasury 2 Year Bond ETF (SHY) - Market share: 63.74%
• Vanguard Short-Term Treasury ETF (VGSH) - Market share: 24.27%
• SPDR Bloomberg Barclays 2 Year Treasury Bond ETF (TBF) - Market share: 6.74%

Expense Ratio:

The expense ratio for SCHR is 0.03%, which is one of the lowest among comparable ETFs in the same category.

Investment Approach and Strategy:

Strategy: SCHR employs a passive management strategy, aiming to replicate the performance of the Bloomberg Barclays U.S. Treasury 2 Year Index by investing in a portfolio of U.S. Treasury bonds with maturities between 18 and 24 months.

Composition: The ETF primarily holds U.S. Treasury bonds with maturities of 1 to 2 years. These bonds are issued by the U.S. government and are considered highly secure investments.

Key Points:

• Low expense ratio of 0.03%
• Tracks the Bloomberg Barclays U.S. Treasury 2 Year Index
• Provides exposure to the U.S. Treasury 2-year bond market
• High liquidity
• Backed by the experience and expertise of Schroder Investment Management

Risks:

• Interest rate risk: Rising interest rates can lead to lower bond prices.
• Credit risk: While U.S. Treasury bonds are considered highly secure, there is a small risk that the government may not be able to meet its financial obligations.
• Market risk: The value of the ETF can fluctuate due to overall market conditions.

Volatility: SCHR has a relatively low level of volatility compared to other asset classes. However, it is still subject to fluctuations due to changes in interest rates and other market factors.

Who Should Consider Investing?

SCHR is suitable for investors seeking:

• A low-risk investment with stable returns
• Exposure to the U.S. Treasury 2-year bond market
• A cost-effective way to diversify their portfolio

Fundamental Rating Based on AI:

8.5/10

SCHR receives a solid rating based on its low expense ratio, strong track record, and the experience of its issuer. The ETF provides investors with a reliable and cost-effective way to gain exposure to the U.S. Treasury 2-year bond market.

Resources and Disclaimers:

• Website Sources:
  • RBB Fund Inc website: https://www.schroderinvestmentmanagement.com/us/en/intermediaries/etfs/us-treasury-bond-etfs/
  • Bloomberg Barclays U.S. Treasury 2 Year Index: https://www.bloomberg.com/professional/product/bloomberg-barclays-u-s-treasury-2-year-index/
  • Morningstar: https://www.morningstar.com/etfs/arcx/schr/quote
• Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.