ETPs that incorporate leverage (daily, and in the case of LBND monthly) from the “bull” side of bond prices that are designed for short term speculative trading and/or aggressive hedging include TMF (Direxion Daily 20 Year Plus Treasury Bull 3X, Expense Ratio 0.95%), LBND (PowerShares DB 3X Long 25+ Year Treasury Bond, Expense Ratio 0.95%), UBT (ProShares Ultra 20+ Year Treasury, Expense Ratio 0.95%), and DLBL (iPath U.S. Treasury Long Bond Bull ETN, Expense Ratio 0.75%).
We would not be surprised if some of these ticker symbols are not readily recognizable to most ETF portfolio managers, especially given the prevailing sentiment to “want to be short U.S. Treasuries” in looking for lower bond prices and thus higher yields, and the fact that this “trade” has been popular for more than two years now among many.
It is readily apparent that the “inverse” bond ETPs have benefited from these conditions, as TBT has over $3.3 billion in AUM currently, while TMV has approximately $324 million in AUM. On the flipside, the levered “long” funds in this category have considerably less average daily trading volume and even lower asset bases (i.e. TMV has $32 million, LBND $29 million, TMF $32 million, and DLBL $3.8 million).
As with many “thematic” based ETPs, sometimes the investment theme is not necessarily acclimated to current market conditions and thus the existence of the products themselves sometimes evades the screens of the portfolio manager, which appears to be the case here to some extent.
iShares Barclays 20+ Year Treasury Bond
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at [email protected].