WisdomTree Floating Rate Treasury Fund

USFR

Market cap $16.4B

WisdomTree Floating Rate Treasury Fund earns a buy rating for its yield premium and low-risk profile vs. traditional Treasury bill funds. USFR offers a 10-15 basis point spread over 3-month T-bills, with a 4.33% trailing 12-month yield and a low 0.15% expense ratio. With low default and duration risk, the fund is ideal for tax-sheltered accounts, especially as Fed rate cuts will likely reduce cash yields below 3%.

There are expectations the Federal Reserve will commence lowering interest rates as soon as next month. That potentially will start an extended monetary loosening campaign.

I rate WisdomTree's USFR ETF a sell due to the likelihood of rate cuts this Fall, which will immediately reduce its yield. USFR's weekly reset structure means its payouts will drop faster than corporate floaters and fixed-rate ultra-short bond funds. Recent performance shows corporate floaters and fixed-rate funds like VUSB and SGOV already offer higher total returns.

WisdomTree Floating Rate Treasury Fund ETF's yield and value are closely tied to Fed policy, making it highly sensitive to anticipated rate cuts. USFR invests in short-dated floating-rate issuances, adding risk to the strategy if the Federal Reserve cuts rates at the September 2025 FOMC meeting. I recommend rotating out of USFR and into intermediate-term fixed-rate Treasury ETFs like SCHR or VGIT for better risk/reward.

By Vanya Sharma, Senior Associate, Capital Markets Key Takeaways As equity markets remain volatile, WisdomTree's fixed income ETFs—like AGGY and SHAG—offer investors a way to anchor portfolios with higher-yielding, investment-grade exposure while managing interest rate risk.

Following the recent spike in 30-year Treasury yields, global fixed income investors may be leery of adding duration in bond portfolios. But there are avenues for allaying those concerns while maintaining exposure to the relative steadiness of U.S. government debt.

Treasury floating rate notes and ETFs like the WisdomTree Floating Rate Treasury Fund (USFR) are often seen as beneficial tools to fixed income investors when yields on U.S. government debt are rising. Rates have been mostly steady this year.

WisdomTree Floating Rate Treasury Fund ETF offers low-risk exposure to floating-rate Treasuries, minimizing interest rate risk and tracking its benchmark closely, minus a small fee drag. The current macro environment supports attractive short-term yields, but anticipated Fed rate cuts by year-end could lower future coupon payments for USFR holders. Strong institutional demand for FRNs and persistent US fiscal deficits may push up yields, potentially benefiting the Fund's future coupons.

The S&P 500 (^GSPC) declined in the first 100 days of President Trump's second term, but exchange-traded funds (ETFs) inflows show that investors are embracing ETFs to invest amid market volatility. TMX VettaFi head of research Todd Rosenbluth sits down with Madison Mills and Freedom Capital Markets chief global strategist Jay Woods to discuss recent inflows into ETFs that mirror the major indexes, as well as fixed income options.

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research Todd Rosenbluth talked about the the WisdomTree Floating Rate Treasury Fund (USFR) with Money Life host Chuck Jaffe. The pair covered a range of topics related to the fund, providing investors with a deeper understanding of the ETF.