GBIL: A Recession-Resilient ETF

2025-04-13 23:11:44 ET

Summary

• Recent market turmoil has shown that pure treasury funds like GBIL are the safest cash parking vehicles, outperforming other short-term funds during sell-offs.
• The Fund's longer duration profile and 0.12% expense ratio make it favorable in today's environment with expected Fed cuts, offering a stable NAV and 4.15% yield.
• Yield enhancement funds with higher dividends, like CSHI and JAAA, experienced significant drawdowns, highlighting the trade-off between higher yields and increased volatility.
• GBIL's composition of T-bills ensures no credit risk, maintaining value even when equity markets decline, making it a reliable choice for investors.

Thesis

One of the most surprising aspects of the recent market turmoil is the volatility associated with many short-term funds, instruments which were supposed to be equivalent to cash parking vehicles. Investors have found out the hard way that the only safe harbor during a recession or market sell-off is represented by T-Bills....

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