The economic backdrop was generally supportive of higher rates as well. U.S. equities closed a stellar year with another strong quarter to reach all-time highs, and overall inflation expectations as reflected in Treasury Inflation-Protected Securities (TIPs) prices increased. U.S. non-farm payrolls came in above expectations despite a partial government shutdown to start the quarter that impacted government jobs, while the unemployment rate fell to 7.0%. Third-quarter Gross Domestic Product (GDP) growth was revised upward to 4.1%, well ahead of initial estimates of 3.6%.
The Barclays U.S. Treasury Index returned -0.75% during the fourth quarter. As designed, the Fund performed in line with the Index, with a total return of -0.82%, net of fees. The Treasury yield curve was mixed, with the middle portion selling off more than the long end. Specifically, two-year Treasury yields rose six basis points (0.06%), while the five-year yield rose 36 basis points (0.36%) and the 10-year rose 42 basis points (0.42%). The 30-year Treasury yield increased 28 basis points (0.28%). We will continue to invest with the goal of providing returns that closely approximate those of the Index.
If you are an income-oriented investor who is looking to diversify your investments by gaining broad exposure to the U.S. Treasury market then this Fund may be right for you. It offers a diversified portfolio of Treasury securities approximating the Barclays U.S. Treasury Index.
- Passively managed in an effort to replicate the performance and composition of the Barclays U.S. Treasury Index.
- Invest substantially all (and at least 80%) of its assets in a representative sample of the U.S. Treasury obligations included in the Index.
- Provide investors with a way to gain broad exposure to U.S. Treasury market.