CIEI targets the sweet spot of the Treasury curve where you get meaningful yield without excessive duration risk. This slice of 3-7 year government bonds offers more income than short-term bills while avoiding the violent price swings of long bonds.
How It Works
The fund holds U.S. Treasury bonds maturing between 3 and 7 years, maintaining constant maturity exposure through regular rebalancing. As bonds approach the 3-year mark they're sold, while new 7-year issues enter the portfolio. This mechanical approach keeps duration around 5 years and provides pure government bond exposure without credit risk or complexity.
Key Features
- Zero expense ratio makes it cheaper than buying individual Treasuries through most brokers
- Intermediate duration provides 2-3x the yield of T-bills with half the volatility of long bonds
- Monthly rebalancing maintains consistent maturity profile unlike a bond ladder that shortens over time
Risks
- A 1% rise in rates would knock off roughly 5% in price — painful but recoverable within a year
- Real returns turn negative when inflation exceeds the ~4-5% yield, eroding purchasing power
- Flight-to-quality rallies are muted compared to long bonds, limiting upside in market panics
Who Should Own This
Perfect for investors who want their safe money actually earning something but can't stomach 15%+ drawdowns when rates spike. Works as the ballast in a 60/40 portfolio or as a parking spot for cash you'll need in 3-5 years. Also useful for liability matching when you have known expenses coming due in that timeframe.