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Bitcoin Meets Treasuries In A Weekly Income ETF Investors Didn't Know They Wanted

BY Benzinga | TREASURY | 03:58 PM EST

VistaShares has rolled out a new ETF that combines U.S. Treasuries, Bitcoin exposure, and an active options strategy, in line with the rising interest in hybrid ETFs that aim to optimize income without forgoing a defensive approach.

The VistaShares BitBonds 5 Yr Enhanced Weekly Option Income ETF began trading on Tuesday, offering a portfolio that combines intermediate-term Treasury investments with a synthetic covered call strategy based on Bitcoin price changes. The fund is actively managed and one-of-a-kind.

Treasury Core With Bitcoin Exposure

The ETF is organized so that about 80% of the portfolio is invested in U.S. Treasury securities, Treasury futures, and ETFs focused on Treasuries with maturities of three to seven years. The other 20% of the portfolio is invested in Bitcoin price changes through a synthetic options strategy rather than direct investment in cryptocurrencies.

VistaShares explained that the options strategy is aimed at achieving an income goal of twice the annual yield of the 5-year U.S. Treasury, with income payments made on a weekly schedule, which is a relatively rare frequency for ETFs.

The company explained that the strategy aims to provide investors with exposure to optimized income while maintaining a substantial portfolio of more traditionally low-risk assets.

Expanding Options-Based Income Strategies

VistaShares framed the launch as a continuation of its strategy to focus on income-oriented ETFs through active options overlays. As the company described, BTYB applies the framework to fixed income and digital assets, with Treasuries as the base and Bitcoin-linked options to enhance income opportunities.

VistaShares also noted that investor interest has been strong in products that aim to simplify diversification and income generation in a single ETF product. The company stated that it intends to continue to roll out new strategies that combine traditional assets with alternative exposures as part of its expanding product pipeline.

Photo: Shutterstock

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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