May 04, 2008 at 1:00 pm by Tom Lydon
ProShares wins the race to be the first inverse bond exchange traded fund (ETF) in the world. Deutsche Bank was hot on their heels, after announcing plans a day earlier to issue a new ETF in Europe that short Eurobonds, says Murray Coleman for Index Universe.
The two new ETFs to hit American markets are:
- ProShares UltraShort Lehman 7-10 Year Treasury (PST)
- ProShares UltraShort Lehman 20+ Year Treasury (TBT)
Both ETFs are set up to measure the inverse of their daily performance of their underlying index. Remember, with a bond fund, the interest earned on cash and financial instruments figures into the overall performance results. Many investors are looking to ProShares’ inverse bond ETFs to neutralize market valuations and as portfolio protection against price fluctuations.
One advantage of a fund that automatically shorts an index is that investors can only lose what they put in. By taking short positions in long ETFs, the losses can go unchecked.
To learn more about long/short ETFs, check out our interview with ProFunds’ CEO Michael Sapir.
Tags | Europe
