ETFs for Bond Bears
Interest Rates Are Going Up
The yield on the 10-year Treasury note is up significantly since the low we experienced in July of 2016.
The Federal Reserve raised the Fed Funds Rate another quarter of a point during the March FOMC meeting, the second increase in only three months. The Fed voiced its intention to raise rates as many as three times in 2017, and a robust U.S. labor market is increasing the likelihood that the Fed will follow through.
ProShares Inverse Bond ETFs
Bond yields and interest rates generally move opposite bond prices. If the trend continues and bad days are ahead for bonds, inverse bond ETFs can make it a good day for bond bears.
Choose from seven ETFs across the yield curve designed to rise as Treasury indexes fall.
As of 12/30/16
|Fund Name||Ticker||Daily Objective*||Index||Index Modified Duration|
|Short 20+ Year Treasury||TBF||-1x||ICE U.S. Treasury 20+ Year Bond Index||17.665 Years|
|UltraShort 20+ Year Treasury||TBT||-2x||ICE U.S. Treasury 20+ Year Bond Index||17.665 Years|
|UltraPro Short 20+ Year Treasury||TTT||-3x||ICE U.S. Treasury 20+ Year Bond Index||17.665 Years|
|Short 7-10 Year Treasury||TBX||-1x||ICE U.S. Treasury 7-10 Year Bond Index||7.601 Years|
|UltraShort 7-10 Year Treasury||PST||-2x||ICE U.S. Treasury 7-10 Year Bond Index||7.601 Years|
|UltraShort 3-7 Year Treasury||TBZ||-2x||ICE U.S. Treasury 3-7 Year Bond Index||4.45 Years|
|UltraShort TIPS||TPS||-2x||Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L)||6.59 Years|
*Before fees and expenses.
Inverse ETFs have one-day investment objectives, and careful monitoring is essential. Rebalancing may be necessary if you intend to hold these ETFs over time. The effects of compounding may cause the return of an inverse ETF to be greater than or less than the index return times the fund multiple for any holding period greater than one day. Sometimes the difference can be significant. And remember, a rebalancing strategy may result in additional transaction costs and tax consequences.