Hedged US Treasury bills and short bonds: what euro investors earn
A currency hedge largely offsets the difference between US and euro short-term interest rates; the US headline yield is not the return a hedged euro investor receives.
Three-month Treasury bills yielded 4.13% on a coupon-equivalent basis on 3 November 2026. That is a dollar yield before tax and hedging costs, with reinvestment risk at maturity. (US Treasury)
Key takeaways
Compare the same currency, period and return basis. A current bill yield and a past fund return answer different questions.
Hedging reduces currency exposure but adds costs and can leave residual exchange-rate risk. Fund units have no deposit guarantee.
Treasury bills and short Treasury bond ETFs are different instruments; the Invesco index below excludes bills.
How the hedge changes the yield
Covered interest parity links forward exchange rates to the interest-rate difference between two currencies. A euro investor hedging dollar assets therefore gives up much of the apparent dollar-rate advantage. A cross-currency basis, different maturities and transaction costs can change the result. (BIS)
Issuer returns over a common period
From 30 September 2025 to 30 September 2026, the issuer factsheets report euro NAV returns of 1.80% for Amundi’s hedged 0-1Y Treasury class and 1.75% for Invesco’s. Amundi’s CSH euro overnight fund reports 2.06%; the ECB compounded €STR index also returned 2.06%. These are historical observations after fund charges and before investor tax and trading costs.
All three funds can lose capital and have no deposit guarantee; hedged funds retain interest-rate and currency risks, and CSH has swap counterparty risk.
The calendar-year observations below show that these funds can lose money. They do not establish a future ranking or measure the largest fall within each year.
Year
Amundi PR1H
Invesco T1EU
Amundi CSH
2022
-1.38%
-1.59%
-0.13%
2023
2.82%
2.86%
3.19%
2024
3.49%
3.49%
3.67%
2025
2.07%
2.00%
2.25%
An illustrative calculation at November rates
The inputs are a 4.07% money-market-equivalent three-month bill yield on 3 November, SOFR of 3.95% on 2 November and €STR of 2.445% on 3 November. Using overnight rates instead of matching three-month OIS rates is an approximation. (US Treasury, SOFR, €STR)
4.07 − (3.95 − 2.445) = 2.565% before basis and costs. Subtracting an assumed 0.10–0.20 percentage-point basis cost and 0.10–0.15 points of fund and hedging costs gives 2.215–2.365%, or about 2.22–2.37% before investor tax.
The current basis and matching OIS rates were not verified. If three-month dollar rates embed expected rises, the overnight comparison can overstate the apparent pickup; those expectations are not established here. Neither the inputs nor the result are a promised return.
For a separate current-rate illustration, XEON’s index terms imply 2.445 + 0.085 − 0.10 = 2.43% before investor tax. It is a swap fund with capital and counterparty risk. The modelled Treasury range is below that indication, but this is not a forecast or a suitability comparison. (DWS)
Maturity and currency risks
A bond with up to a year remaining can be an older coupon-paying Treasury note, not a Treasury bill. Invesco’s Bloomberg US Treasury Coupons Index excludes Treasury bills. Longer duration generally means a larger price fall when yields rise; a fund can therefore lose capital even when its bonds are issued by a government. (Invesco)
Without a hedge, the euro return is (1 + dollar asset return) × (1 + dollar appreciation) − 1. A hypothetical 3.75% dollar return and 2.86% appreciation give about 6.72% in euros. With a 5% dollar depreciation instead, the result is about −1.44%. Currency movement is one contributor, not the whole return.
Fund terms and size
Issuer figures are dated 30 September 2026. AUM below is total fund assets, not the assets of the EUR-hedged share class; share-class liquidity and trading spreads require separate checks.
Interest-rate, credit and residual currency risk; no deposit guarantee
Where these funds are available
These platforms publish securities-account services and fees. Individual ISIN availability, trading venue and account eligibility were not verified for every fund; check them before relying on a quoted commission. Fund investments carry capital and liquidity risks, and spreads add to trading fees.
In France
DEGIRO: its ETF Core Selection has €0 commission plus a €1 handling fee per order; check the current instrument and venue list.
Fortuneo and BoursoBank: securities-account services; individual fund availability and any fee waiver need confirmation.
In Germany
Scalable Capital: eligible Amundi, iShares, Vanguard and Xtrackers ETF purchases from €250 are free on FREE; other trades cost €0.99. The purchase waiver does not cover sales.
DEGIRO: €0 commission plus €1 handling for the current ETF Core Selection; confirm the instrument and venue.
Across Europe
Interactive Brokers: fixed SmartRouting commissions for French and German shares and ETFs are 0.05%, minimum €3, with no maximum. Direct routing and tiered pricing differ.
Terms checked on 4 November 2026; fees and availability can change.
Performance figures use issuer NAV factsheets dated 30 September 2026, not justETF exchange-price returns. €STR is calculated from ECB index levels 107.67051668 and 109.89080960. Past performance does not predict future results; spreads, commissions and investor taxes are excluded. The yield scenario uses mixed-date overnight observations and explicit assumptions, not observed hedge cashflows.
Does a euro hedge preserve the higher US interest rate?
Usually not: forward exchange rates largely offset the short-rate differential. Basis, maturity, fees and imperfect hedging also matter. An illustrative calculation using November 2026 inputs gives 2.22% to 2.37% before investor tax, not a forecast or a guaranteed return.
What changes without a currency hedge?
The euro return combines the dollar asset return and the dollar’s movement against the euro. For illustration, a 3.75% dollar return and 2.86% dollar appreciation produce about 6.72% in euros; a 5% dollar fall instead produces about −1.44%. These are scenarios, not observed fund returns.
