What is Schatz?
The Schatz is Germany's 2-year government security — the entry point into capital markets for conservative investors seeking minimal interest rate risk while earning more than money market rates.
A Schatz (Bundesschatzanweisung) is a short-term German federal treasury note with a 2-year maturity. Schatze are the shortest coupon-bearing German government securities, offering low duration risk with the full backing of Germany's AAA credit.
Key Characteristics
Schatze have 2-year maturities at issuance with fixed annual coupons. Their short duration (~1.9 years) means prices barely move when interest rates change. They're the starting point of the German capital market yield curve.
Investment Use Cases
Schatze are popular for: parking cash with minimal risk, laddering strategies (rolling from Schatz to Schatz), benchmarking short-term Euro rates, and collateral for repo operations. Institutional investors use them extensively for liquidity management.
Schatz Futures
The Schatz future (also called Short Bund future) trades on Eurex with €100,000 notional value. It's used to hedge or speculate on short-term Euro interest rates and is one of the most actively traded interest rate futures globally.
Schatz vs. Bubill
| Aspect | Schatz | Bubill |
|---|---|---|
| Maturity | 2 years | 3-12 months |
| Coupon | Fixed, paid annually | Zero coupon (discount) |
| Market | Capital market | Money market |
| Duration | ~1.9 years | < 1 year |
| Minimum denomination | €0.01 | €0.01 |
Practical Example: Schatz for Capital Preservation
You have €100,000 to preserve for 2 years. You buy Schatz 2.5% 2027 at 99.50. You pay €99,500. Year 1: receive €2,500 coupon. Year 2: receive €2,500 coupon plus €100,000 principal. Total return: €5,500 on €99,500 investment — about 2.7% annualized. If rates spike 2%, your Schatz only drops to ~€96 — far less than a 10-year Bund would fall.
Frequently Asked Questions
What is a Schatz in simple terms?
A Schatz is a 2-year German government bond. It's the safest way to invest in German government debt with minimal exposure to interest rate changes.
Why are Schatze popular with conservative investors?
Because they have very low duration — when interest rates rise, Schatz prices fall only slightly compared to longer bonds. You get government safety with minimal price volatility.
What does 'Schatz' mean?
Schatz is short for Bundesschatzanweisung, meaning 'federal treasury note.' The word 'Schatz' also means 'treasure' in German — appropriate for a safe investment.
Should I choose a Schatz or a money market fund?
Schatze typically yield more than money market funds and have no credit risk (unlike bank deposits). However, money market funds offer daily liquidity while Schatze lock up capital for 2 years unless you sell on the secondary market.
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