Ok, if they lower interest rate again, yield will go down but it seems that the price to sell the ETF does not go below 100$. So if I buy for 100$, I will profit from the yield as long as rates are high, and then I can sell for 100$ again. Could it go below 100$? So whats the catch?
Interest rates go down => bond prices go up
Interest rates go up => bond prices go down (see TLT for last two years)
In this case because of very short maturity you can pretty much ignore impact of rate changes on bond prices.
If tomorrow JPOW does emergency hike by 5 percentage points you may lose a bit, but that’s not going to happen. Also very quickly you will benefit from those increases. But had you held TLT when 5% change happens you’re
Other investments might bring bigger returns during the period of time you would be holding that fund. Buying other assets might be more expensive in the future, by more than the yield you would get in a short term US government fund.
The value of $100 will fluctuate when converted into CHF. If your expenses are in CHF, you may end up with less money investing in SGOV (or a similar fund) than by using a savings account (or you might end up with more, on the short term, the currency exchange markets are very volatile).
Correct, most short term govt debt is emitted as zero-coupon bond (called treasury “bills”) which always mature at par. So there’s a small repricing lower on hikes but they’ll mature so quickly at 100 that repricing is negligible.