When you invest your USDC (or other stablecoins) in our funds, five basic steps are taken:
- We exchange that USDC for USD, which is then held in a bank account.
- That USD is then used to purchase assets. These assets could be ETFs or funds (which in turn hold single name securities and other assets).
- New fund tokens are minted and deposited in your wallet.
- As those underlying assets earn a yield, that yield is then reinvested in purchasing more assets, auto-compounding your yield.
- At any point, if you want to redeem your tokens, your tokens are burned, and you receive back USDC.
Focus on Return AND Risk
Whether it was astronomically high APYs via liquidity mining or speculating on ICOs, investors in crypto have often chased high returns. However, as we've come to see since the start of 2022, insufficient attention has been paid to the potential risk of such investments. While this was perhaps understandable in the early days of the space, as the industry matures and more sophisticated players enter, an additional focus on risk—and risk management—is needed.
It's for these reasons that our first three funds are explicitly focused on the low-risk side of the spectrum—tokens backed by stable, liquid, real-world assets:
- OUSG provides exposure to short-term US Treasuries.
- OSTB provides exposure to short-term, corporate bonds with a weighted average investment grade rating.
- OHYG provides exposure to high yield bonds.
|Class / Token||OUSG||OSTB||OHYG|
|Asset Exposure||US Treasuries||Short-Term Bonds||High Yield Bonds|
Estimated rating based upon DBRS Morningstar® 1-year idealized default probabilities for the holdings within each Ondo Fund. See the risk metrics page on our website.
OUSG and OSTB
Both U.S. Treasuries and investment-grade corporate bonds are historically very low-risk investments whose primary objective is capital preservation (i.e. making sure you don't lose money) while offering some yield.
As a simple comparison, consider the performance of various assets over the past year (from Nov 2021 - Nov 2022). During that period, the S&P 500 dropped almost 16% while the NASDAQ dropped almost 28%. BTC dropped almost 75%. Yet SHV - a US Short-Term Treasuries ETF actually gained 0.8%:
The primary holding of OUSG is Blackrock's iShares Short Treasury Bond ETF with over $19 billion in net assets. The primary holding of OSTB is PIMCO's Enhanced Short Maturity Active ETF, with almost $9 billion in net assets. Both of these ETFs are well-regarded, large, and highly liquid ETFs used by institutions around the world. These holdings are safe, secure, and liquid.
While OUSG and OSTB have capital preservation as their first priority (followed by liquidity and yield), OHYG seeks to track the investment results of an index composed of hield yield corporate debt. The primary holding of OHYG is Blackrock's iShares iBoxx $ High Yield Corporate Bond ETF. Make no mistake, however — in terms of DeFi, this is still a relatively low-risk fund, yielding over 7.5% annualized at the time of this writing. Find out more about HYG.