SGOV - SGOV: Invest In Cash While It's Not Trash
2024-02-21 06:27:33 ET
Summary
- Cash has reemerged as a valuable asset class, earning a healthy spread over inflation.
- Ultrashort bond and treasury ETFs, such as iShares 0-3 Month Treasury Bond ETF, have become popular as their dividend rates continue to rise.
- SGOV offers a balance of price stability and yield, making it a good option for earning interest while preserving principal.
- We dive in and discuss the ETF and risk factors for ultrashort funds.
During the low interest rate era, legendary investor Ray Dalio boldly proclaimed that "cash is trash". Zero interest rate policy combined with healthy inflation meant traditional savings accounts or treasuries of all maturities were losing instruments in terms of real return. The yield curve was flat enough that even long maturity treasury bonds were inadequate to hedge inflation while exposing any investor to a massive drawdown in the event rates would rise. To make matters worse, spiking inflation after the pandemic era meant negative spreads were digging even deeper....
SGOV: Invest In Cash While It's Not Trash