Treasury ETF

Exchange traded funds (ETFs) tied to the US Treasury have been available for quite some time now. They offer investors yet another way to diversify their portfolios while also providing a little more flexibility over traditional treasury investments.

Barclays offers 3 treasury ETFs. They are: iSHARES Lehman 20+ Year Tsy Bond Fund (TLT),
iSHARES Lehman 7-10 Year Tsy Bond Fund (IEF), and iSHARES Lehman 1-3 Year Tsy Bond Fund (SHY). As you can probably tell by the names, the key difference among them is the maturity date. The maturity date affects the income as well as the day-to-day volatility with shorter term bonds being less volatile than the longer term bonds.

As I wrote in my bond ETF posting, I hold two bond ETFs in my portfolio. I don't have any of the three listed above, my the aggregate bond ETF I do have includes a portion of its holdings in treasuries with varying maturities. My other bond ETF focuses on the corporate bond market. These two ETFs are sufficient for my diversification needs especially since my current age and financial situation allows me to target equity-style investments.