One of the best performers in the exchange traded product universe in 2012 is a little known product offered by PowerShares that is designed to deliver leveraged long exposure to the Italian sovereign debt market.
PowerShares DB 3X Italian Treasury Bond Futures ETN (NYSEArca: ITLT) has rallied 42.21% year to date and Italy is clearly in the spotlight as one of the “weaker hands” in the ongoing Eurozone drama.
The fund aims to replicate the exposure of a long position in bonds issued by the Republic of Italy via futures, and although the ETN is off its recent highs (it traded as high as $24.87 in mid March), the product is still a hefty 67% higher than its lows of last December in 2011.
Averaging only about 1,900 shares traded daily, the product could be classified as a prototypical “thinly traded” ETP, but one should recognize that the underlying liquidity in the product is a function of the liquidity via the bonds that the index tracks. That said, larger trades can be executed efficiently in this product via the right techniques and communication with desks that are adept in ETF/ETN pricing.
ITLT is a leveraged product, and thus is not designed to be held for longer periods of time. That said, PowerShares DB Italian Treasury Bond Futures ETN (NYSEArca: ITLY) may be more appealing to those managers whom are leaning “long” in terms of a resolution in Europe, and more directly, one that would positively affect Italy.
ITLY delivers 1:1 exposure to the Italian Treasury Bond futures market via an ETN wrapper, and this product has rallied 14.43% year to date.
PowerShares DB 3X Italian Treasury Bond Futures ETN