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The 2-yr FRNs trade at 3-mo T-Bill rate + spread (positive or negative). So, they should track the (overnight) fed fund rate closely. You can also buy these at brokerages and Treasury Direct. These are obviously INVESTMENT GRADE.
But these are DIFFERENT from typical FR/BL funds that have floating rate relative to a reference (LIBOR) but are NONINVESTMENT GRADE (RPHYX is an example)
Keep expectations reasonable. USFR is a portfolio that will lag in rate hikes for now; there is 15-bps ER drag too. Just buying 3-mo T-bills at Treasury Direct or brokerages (commission-free), and roll-repeat, should get 0.83%+. https://stockcharts.com/h-perf/ui?s=USFR&compare=RPHYX&id=p59078190966
Comments
But these are DIFFERENT from typical FR/BL funds that have floating rate relative to a reference (LIBOR) but are NONINVESTMENT GRADE (RPHYX is an example)
USFR https://www.wisdomtree.com/etfs/fixed-income/usfr
RPHYX https://finance.yahoo.com/quote/RPHYX/profile?p=RPHYX&.tsrc=fin-srch
Can someone think of a downside to it?
https://stockcharts.com/h-perf/ui?s=USFR&compare=RPHYX&id=p59078190966
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value=2022