The investment objective of the 1nvest ICE US Treasury Short Bond Index Feeder ETF is to track the ICE US Treasury Short Bond Index ("the Index") as closely as possible, in South African Rand.

The fund is a feeder fund and as such 1nvest will replicate the index by investing in the iShares $ Treasury Bond 0-1yr UCITS ETF. This underlying fund tracks the ICE US Treasury Short Bond Index ("the Index") and aims to replicate the performance of the Index.

The Index includes U.S. dollar denominated, fixed rate securities (Treasury Bills and Treasury Notes) with minimum term to maturity greater than one month and less than or equal to one year.

The fund may also hold a small portion in cash instruments to effect efficient portfolio management.

Fund review

The fund provides exposure to US Dollar denominated short term government bonds issued by the US Treasury, with maturities between zero and one year. The fund’s weighted average maturity was 0.35 years and the weighted average dollar yield to maturity was 5.21% with an effective duration at 0.30 years as at end of Q1 2024.

Market overview

In the first quarter of 2024, global markets were quite resilient despite the unchanged interest rates in major economies. The US labour market remained strong over the first quarter but poses challenges from a monetary policy perspective. Major central banks globally have not yet cut interest rates, which might be due to the delay by the US Federal Reserve (Fed). Over the first quarter of 2024, MSCI EM increased by 2.2% and MSCI World by 3.0% both outperforming MSCI EMEA which had a fall of 0.6%. Global equity performed well, driven by technology and communication services.

In South Africa, there remains persistent challenges within the macroeconomic environment hindering economic growth, mainly due to continuous electricity outages and supply side challenges related to the failing railway and ports infrastructure, which provided little relief to the SA inflation rate remaining towards the upper end of the 3% to 6% target range. At the last MPC meeting, the Governor emphasised anchoring inflation to 4.5% and was aligned to market expectations of keeping interest rates unchanged. Local equities were up over the first quarter with the FTSE/JSE Top 40 up 3.85% and the FTSE/JSE Capped SWIX up 2.9%. The ALBI declined by 1.9% whilst the rand strengthened to 18.80 against the USD over the quarter.