What's your strategy for rising rates?
Your Bond Portfolio May Be at Risk
Investors increasingly have been drawn to bonds, which generally have delivered robust returns over the last 30 years.
But bond prices don't always go up. Experts have been raising concerns about the sustainability of low interest rates.
Bond prices and yields generally move opposite each other. So if these experts are right and rates increase, bond yields are likely to rise. As a result, many bond portfolios could incur significant losses if bond prices go down.
Inverse bond ETFs may offer a way to potentially help cushion a bond portfolio.
How Inverse Bond ETFs Work
- Inverse bond ETFs are designed to move opposite bond prices tied to their benchmark indexes.
- They allow you to prepare for bond price declines by hedging your portfolio.
To understand how inverse ETFs work, see Geared Investing: An Introduction to Leveraged and Inverse Funds.
For more on hedging a portfolio with an inverse bond ETF, see Hedging Bond Risk with Inverse ETFs.
Nine ProShares Choices
ProShares offers nine inverse bond ETFs across a range of fixed income market sectors:
As of 6/30/16
|Fund Name||Ticker||Daily Objective*||Index||Index Modified Duration|
|Short 20+ Year Treasury||TBF||-1x||Barclays U.S. 20+ Year Treasury Bond Index||19.24 Years|
|UltraShort 20+ Year Treasury||TBT||-2x||Barclays U.S. 20+ Year Treasury Bond Index||19.24 Years|
|UltraPro Short 20+ Year Treasury||TTT||-3x||Barclays U.S. 20+ Year Treasury Bond Index||19.24 Years|
|Short 7-10 Year Treasury||TBX||-1x||Barclays U.S. 7-10 Year Treasury Bond Index||7.79 Years|
|UltraShort 7-10 Year Treasury||PST||-2x||Barclays U.S. 7-10 Year Treasury Bond Index||7.79 Years|
|UltraShort 3-7 Year Treasury||TBZ||-2x||Barclays U.S. 3-7 Year Treasury Bond Index||4.59 Years|
|UltraShort TIPS||TPS||-2x||Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L)||5.26 Years|
|Short High Yield||SJB||-1x||Markit iBoxx $ Liquid High Yield Index||3.83 Years|
|Short Investment Grade Corporate||IGS||-1x||Markit iBoxx $ Liquid Investment Grade Index||8.36 Years|
*Before fees and expenses.
ProShares offers the nation's largest lineup of alternative ETFs. We help investors build better portfolios by providing access to alternative investments delivered with the liquidity, transparency and cost effectiveness of ETFs.
Have questions about ProShares or our alternative ETFs? Contact your financial professional or call ProShares at 866.776.5125.
These Short ProShares ETFs seek returns that are -1x, -2x or -3x the return of an index or other benchmark (target) for a single day, as measured from one NAV calculation to the next, before fees and expenses. Due to the compounding of daily returns, ProShares' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their ProShares holdings consistent with their strategies, as frequently as daily. For more on correlation, leverage and other risks, please read the prospectus.