Short-term (3-6m) EUR investment - EUR alternative to US T-bills or what?

[dowthut]

I am looking to invest some savings that would go towards a house downpayment, so I want to keep them available in short term.

Local banks (Greece) offer a 6m deposit rate of around 1.5% which seems low given the general rates around the world.

I would look to get a 3-6m US T-bill for roughly 2.2% but I don't want to get exposed to FX risk for this.

Is there an equivalent to those but denominated in EUR? Any other alternatives for this kind of short-term investment, given the generally high interest rates these days?

 

[lovelygrace]

@dowthut Xtrackers II EUR Overnight Rate Swap UCITS ETF

Tracks the performance of a deposit earning interest at the Euro short term rate plus 8.5 basis points adjustment.

The euro short term rate currently is 2.9%.

It's a synthetic ETF, so keep in mind there's some counterparty risk.

 

[inkarpathos]

@lovelygrace note that there are management fees for ETFs.

 

[lovelygrace]

@inkarpathos Correct, for the one I mentioned it's 0.1%.

 

[inkarpathos]

@lovelygrace That's 35% of the 2.9% yield mate.

 

[lovelygrace]

@inkarpathos It's 3.5%, not 35%.

 

[tzadik]

@lovelygrace Can you explain more about counterparty risk?

 

[lovelygrace]

@tzadik Check out this article: https://www.justetf.com/en/academy/synthetic-replication-of-etfs.html

 

[trnich]

@lovelygrace I don't understand how this ETF works

I'm looking at the chart and I see ups and downs like any stock. But an ETF that tracks short term bonds and accumulates the coupons should literally only go up right?

 

[lovelygrace]

@trnich My understanding is because it's an ETF, there's price fluctuations due to the ETF trading, but I might be wrong.

Keep in mind this is not a short term bond ETF, it's a synthetic ETF tracking the €STR.

 

[rosersmk]

@lovelygrace Interest rates were negative for a while..

 

[ksheppard]

@trnich If it tracks the bond prices it can go down, for example, the day that central bank raises the interest all bonds will go down.

 

[biblicalbro]

@dowthut https://www.bogleheads.org/wiki/Cash_equivalents_for_EU_investors

I like IE00BCRY6557 / IE000RHYOR04 the most.

 

[inkarpathos]

@dowthut EU interest rate is "only" 3%.

3.5% in a week, according to consensus.

You cannot compare it to the US which has been much more aggressive.

 

[dowthut]

@inkarpathos Well yes, but compared to my bank's 1.5% there's a considerable difference.