ETF spotlight on iPath US Treasury Flattener ETN (NYSEArca: FLAT), part of an ongoing series.
Assets: $45.21 million.
Objective: The iPath U.S. Treasury Flattener Exchange Traded Note reflects the daily inverse performance of the Barclays Capital U.S. Treasury 2Y/10Y Yield Curve Index, which implements a sophisticated investment strategy that allows investors to bet on slope of the yield curve – the level of the index increases as the yield curve steepens and decreases as the yield curve flattens. “FLAT employs a strategy that seeks to make money when the two-year versus 10-year yield spread declines,” investment researcher Morningstar explains.
Holdings: To achieve its target objective, the fund holds a weighted “long” position in 2-year Treasury futures contracts and a weighted “short” position in relation to 10-year Treasury futures contracts.
What You Should Know:
- Barclays is the fund issuer.
- FLAT has an expense ratio of 0.75%.
- The fund is down 2.60% in the last three months, up 8.38% over the last three months and up 22.50% year-to-date.
- FLAT performs when the the spread between two-year and 10-year yields declines, or “flattens,” by shorting the two-year note and going long the 10-year note.
- “Typically the [Treasury yield] curve is upward sloping because investors usually demand more interest for locking their money up for longer periods,” Morningstar analyst Timothy Strauts writes in a profile of the ETF. “The yield curve is steep. This elevated state can not last in the long term, which may make now an opportune time to buy this fund.”
- The iPath US Treasury Steepener ETN (NYSEArca: STPP) takes the opposite strategy.
iPath US Treasury Flattener ETN
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.