The New Cash Strategy: How TRSY Helps Investors Navigate Today’s Yield Landscape

Short term yields have shifted, liquidity matters more than ever, and investors are rethinking how to manage cash efficiently. In this Lead-Lag Deep Dive, Melanie Schaeffer sits down with Aram Babikian to break down the purpose of TRSY, why its structure is different from traditional cash vehicles, and how investors are using it in today’s rate environment.
They explore why liquidity, cost, and transparency are shaping cash decisions, how TRSY compares to CDs, money markets, and ultra short bond funds, and what its treasury-only structure means for both risk and potential tax advantages. Babikian also explains how the short duration profile, competitive expense ratio, and intraday tradability create flexibility for investors who need cash options without sacrificing yield.

In this episode:

• Why TRSY offers a different approach to short term cash management

• How intraday liquidity can help investors react to market volatility

• How expense ratios impact yield preservation in a higher rate world

• Key differences between TRSY, CDs, money markets, and ultra short bond funds

• The potential tax benefits tied to treasury backed income

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Episode Transcript

SPEAKER_00 (01:12):
Really, the purpose of the X Tracker's ETF uh
Treasury, which is low cost,it's liquid, and it's a way to
earn competitive yields on USTreasury bills, which can make
for a potentially compellingcash management tool, as well as
a product that enables you tohave options in a space where

(01:38):
usually we think about CDs,money markets, or other
ultra-short bond funds.

SPEAKER_01 (02:15):
A fund designed to help investors manage cash
efficiently in a shifting rateenvironment.
Aram, let's start with thepurpose of TRSY.
For investors holding excesscash or short-term reserves,
what problem does this ETFactually solve?
And why is now a good time to belooking at TRSY?

SPEAKER_00 (02:34):
The purpose of this product is, first of all, to
bring something from a valuestandpoint.
It is incredibly competitivelypriced at only six basis points.
And really the purpose of the XTracker's ETF uh Treasury, which
is um it's low cost, it'sliquid, and it's a way to earn

(02:59):
competitive yields on USTreasury bills, um, which can
make for a potentiallycompelling cash management tool,
um, as well as a product thatenables you to have options in a
space where usually we thinkabout CDs, money markets, or

(03:22):
other ultra-short bond funds.

unknown (03:24):
Yeah.

SPEAKER_01 (03:24):
So to get a little more into that, one of TRSY's
biggest advantages, as you said,is liquidity.
Uh CDs and other fixed-terminstruments lock up capital.
While TRSY trades intraday, howimportant is that flexibility in
today's market?

SPEAKER_00 (03:38):
In my opinion, I think it's very important,
especially uh considering, likeI said, where we are um in the
cycle right now, and you havesome volatility that you're
seeing in the markets.
Sometimes people want to raisecash to take advantage of
certain situations.
Very difficult to do with CDs.

(03:58):
Uh, you do uh most of the timepay a penalty for early
withdrawal, uh, depending onwhere you got that CD, they can
be quite high in terms of thefees.
But with uh TRSY, I mean, giventhe liquidity profile, not just
for the fact that it is an ETFand trades throughout the day,

(04:20):
just like any other ETF, but uhthe underlying liquidity of TRSY
is based off of treasuries,which are some of the most
liquid instruments on earth, um,it creates a scenario where even
the trading premiums are quiteminimal when it comes to TRSY,

(04:40):
potentially uh beating out anyearly withdrawal fees that you
might see in CDs as well.

SPEAKER_01 (04:47):
So to touch again on the cost, TRSY's expense ratio
is so small, far below mostmoney market funds or ultra
short bond ETFs, how much of anadvantage does that create for
uh yield preservation?

SPEAKER_00 (05:00):
A few things.
So again, TRSY's uh net expenseratio is six basis points.
Now, uh, when we were in thezero interest rate environment
for quite some time, most ofthese money market funds um
didn't charge a fee.
And you couldn't because youwere you weren't really getting
much yield on it.

(05:20):
Um but since that environmenthas shifted, there are some very
popular money market funds thatare charging over 30 basis
points, some of them even ashigh as 42 basis points.
And you know, uh on top of that,you have an instrument that uh,

(05:41):
by its function and feature, hasa stable NAV of one.
Now that can be a good thing,and it could also be a bad
thing, especially if there'sroom for appreciation, you're
not necessarily going to getthat in a stable vehicle, while
in a product like TRSY, that airthere is potential for

(06:03):
appreciation, but obviouslythere's also potential for
depreciation.
With that being said, given theshort time frame of zero to one
year, your duration is quitemuted.
With that being said, also, um,money market funds actually
don't just hold treasuries.
Some of them can hold asset backsecurities, they can hold some

(06:25):
other type of debt.
So we are strictly sticking totreasuries, and that removes
theoretically credit risk.

SPEAKER_01 (06:34):
That's what I wanted to ask you about next.
For uh investors who arecomparing uh the different
products, where does TRSY fitwithin the mix and how does its
risk profile differ?

SPEAKER_00 (06:46):
If you're looking at as a cash management tool or
you're looking as maybe anincome instrument, you're
probably going to run up againstsome ultra-short bond funds.
Now, those ultra-short bondfunds will likely have a higher
yield than TRSY, but that's alsobecause of the holdings that
they have.

(07:06):
So again, you're introducingcredit risk if you're going into
corporate bonds or asset backedsecurities, and TRSY avoids that
by strictly sticking totreasuries.
Um, with that being said, someof these bond funds can also be
quite expensive.
Again, we're only charging sixbasis points here.
Obviously, these are things thatyou want to always look at.

(07:29):
But there's also anotheradvantage to treasuries, and
that comes down to the taxation.
Of course, you want to alwaysspeak to your accountant
regarding that, but especiallyif you're in a high-tax state,
uh, being that these aretreasuries, uh, there is the
added benefit of no state incometaxes on the income received

(07:51):
from a product like TRSY becauseof its holdings and treasuries.
While that might not necessarilybe the case for an ultra short
bond fund.

SPEAKER_01 (08:01):
So, Aram, lastly, for investors and advisors who
are interested in connectingfurther with you, uh, where can
they go?

SPEAKER_00 (08:08):
They can go on our website at xtrackers.com.
And um, we do have manyresources available.
You can sign up to ournewsletter, X Trackers Extra,
and uh happy to uh speak furtherif uh the need does arise.
I do believe that TRSY is agreat product that combines

(08:29):
liquidity, safety, costefficiency, and potential tax
advantages.
And it can be at times asuperior choice for modern cash
management, especially comparedto CDs, some money market funds,
and ultra-short bond ETFs.

SPEAKER_01 (08:46):
Thank you uh to everybody for watching here and
thank you for joining uh today'slead leg deep dive, where we go
beneath the surface of productsand portfolios shaping global
returns.
Be sure to like, follow, andsubscribe for more conversations
like this.