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Short-term bond ETFs gain appeal as Japanese yields surge
Japan’s 10-year yield rose to 3% for the first time since 1996, increasing the cost of the yen carry trade and pushing investors toward short-duration ETF exposure.
Bond market volatility is rising as Japanese yields climb, with the Japan 10-year yield reaching 3% for the first time since 1996 and the 2-year yield also setting a high, ETF Trends reports.
The outlet said the yen move also increases the cost of the yen carry trade, where investors borrow in low-yield yen and invest in higher-yield assets elsewhere, adding to pressure on global markets.
Against that backdrop, ETF Trends highlighted short-term bond ETFs such as the Goldman Sachs Ultra Short Bond ETF (GSST), arguing shorter duration means less exposure to price declines when yields rise.
ETF Trends added that GSST charges a 16 basis point fee and cited a 4.29% 12-month trailing distribution rate as of July 31, noting the fund targets high-quality, investment-grade short-term bonds using an active ETF structure.