The Elevate US Treasury Strategy

Objective: The Elevate US Treasury Strategy is designed to generate the “risk-free” return.

Goal: The goal of this strategy is to produce a higher rate of return on cash than one could earn at a bank.

Since the United States (US) has the ability to print new dollars to pay off debts as they come due, the debts of the US Treasury Department are often referred to as “risk free.” Risk free does not mean that these securities can never lose value, but rather than the government will not default, or be unable to pay the debts bank upon maturity. The price of the securities prior to maturity can, and do move around, both up and down.

The longer the amount of time between today and the maturity date (duration) the more those prices move around. The closer the maturity date is to today; the less prices change.

Generally, US Treasury Securities that mature within one year, also called T-Bills, are considered to be “cash,” because even if interest rates move significantly higher, the price isn’t impacted too much. And, even if the price was severely impacted, the holder would likely be able to hold to the maturity date and receive the full value.

The Elevate US Treasury Strategy only invests in US Treasury Securities that mature in one year or less, usually (but not always) with approximately 1/12th of the holdings maturing each month for 12 months. As each month passes and a T-Bill matures, we take those proceeds and invest them into a new T-Bill that matures 12 months from then.

Depending on the term structure of interest rates, we may decide to put more or less than 1/12th of the capital into any one month’s maturity. For example, if the six-month maturity is paying substantially more than all the other maturities, we may decide to allocate more than 1/12th into that maturity and reduce the allocations of one, or more of the others, in an effort to capture a higher annualized rate of return than would otherwise be expected.