This Fund Put $106 Million to Work at a Nearly 4% Yield

Nicholas Hoffman & Company disclosed a significant purchase of 1,411,985 shares of the Vanguard 0-3 Month Treasury Bill ETF (NASDAQ:VBIL), with an estimated transaction value of $106.59 million based on quarterly average pricing, according to a recent Securities and Exchange Commission filing.

What happened

According to a Securities and Exchange Commission (SEC) filing dated February 2, Nicholas Hoffman & Company increased its holding in the Vanguard 0-3 Month Treasury Bill ETF (NASDAQ:VBIL) by 1,411,985 shares. The estimated transaction value for the quarter, calculated using average closing prices, was $106.59 million.

What else to know

This was a buy; VBIL now represents 3.15% of the fund’s 13F AUM

Top holdings after the filing:

• NYSEMKT: VOO: $869.59 million (20.2% of AUM)
• NYSEMKT: VEA: $797.67 million (18.5% of AUM)
• NYSE: BRK-B: $397.42 million (9.2% of AUM)
• NYSEMKT: VWO: $355.38 million (8.2% of AUM)
• NYSEMKT: VO: $341.42 million (7.9% of AUM)

As of February 2, VBIL shares were priced at $75.64, up 0.5% over the past year.

Company Overview

Company Snapshot

• VBIL offers an ETF tracking US Treasury bills with maturities of three months or less, providing exposure to high-quality, short-term government debt instruments.
• The fund operates a passively managed investment vehicle that seeks to track an index of US Treasury bills with maturities of three months or less.
• It seeks to provide exposure to low-duration US Treasury bills with the objectives of capital preservation, liquidity, and stable income.

The Vanguard 0-3 Month Treasury Bill ETF seeks to provide investors with a liquid, low-risk vehicle for short-term cash management by tracking an index of US Treasury bills with maturities under three months. The fund's strategy focuses on maintaining a portfolio with minimal interest rate risk and high credit quality, appealing to risk-averse investors and institutions.

What this transaction means for investors

This fund already holds nearly half its assets in broad equity ETFs and blue-chip names, so adding short-duration Treasurys seems less about hiding and more about staying flexible, and VBIL does pretty much that. VBIL holds U.S. Treasury bills maturing in three months or less, carries an expense ratio of just 0.06%, and recently offered a 30-day SEC yield of 3.56%, with virtually no credit risk and minimal duration exposure. At a market price of $75.64, returns over the past year have been flat, which is precisely the point. This is not a return engine. It is a parking spot.

Meanwhile, Nicholas Hoffman & Company’s largest positions remain tilted toward equities, with the majority of assets in broad U.S. and international stock ETFs and another 9% in Berkshire Hathaway. Against that backdrop, allocating just over 3% of AUM to ultra-short Treasurys reads as balance, not caution.

It’s important to remember that liquidity has value, especially when it pays something back. Holding dry powder at a reasonable yield allows capital to move quickly when opportunities appear, without forcing sales elsewhere. That makes this seem like patience with optionality, not a market call.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Vanguard FTSE Developed Markets ETF, Vanguard Index Funds - Vanguard Mid-Cap ETF, Vanguard International Equity Index Funds - Vanguard Ftse Emerging Markets ETF, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.