F/m Investments: An Innovative Way Through the Bond Jungle

While the antiquated TreasuryDirect portal of the US Department of the Treasury causes headaches for bond investors, F/m Investments is seizing the opportunity. With its innovative series of single-bond ETFs, the company offers seamless access to government bonds across the entire yield curve. The demand for government bonds has overwhelmed the government-operated TreasuryDirect portal; investors face long wait times to obtain liquidity by transferring their bonds to external brokerage accounts. Alex Morris, CEO of Washington, D.C.-based F/m Investments, clearly sees the problem but cannot do much for the four million affected. However, his company has been offering an alternative for two years. Led by their flagship, the $4.3 billion US Treasury 3 Month Bill ETF (TBIL), F/m Investments manages approximately $6 billion across a range of ten ETFs that offer access to individual government bonds. TBIL, launched in August 2022, won the Best New ETF award from etf.com in 2023 – remarkable at a time when product creativity is sweeping the ETF world. Unlike leveraged equity funds that use derivatives to enhance performance, F/m's single-bond ETFs are a straightforward way to trade government bonds. "We hold the same bond but offer significantly more liquidity and trade on the secondary market," explains Morris. The bottleneck occurred at the end of 2020 when government interest rate adjustments brought inflation to record levels and government bonds appeared as a safe investment. The sudden popularity of I-Bonds increased the number of accounts on TreasuryDirect from around 600,000 in 2019 to nearly four million. The Wall Street Journal reported last week on the challenges posed by the outdated system. "TreasuryDirect offers an exciting service for everyone to invest directly in bonds alongside institutional giants like Goldman Sachs," notes Morris, but emphasizes its limitations as a retail broker. Originally designed to hold bonds until maturity, the portal is not set up for early sales – it lacks a straightforward transfer function to brokerage accounts.