ETF Spotlight on the iPath US Treasury 10-year Bear ETN (NYSEArca: DTYS), part of an ongoing series.
Assets: $62.8 million.
Objective: The iPath US Treasury 10-year Bear ETN tries to reflect the inverse, or -100%, exposure to the Barclays 10Y US Treasury Futures Targeted Exposure Index, which is designed to decrease in response to an increase in the 10-year Treasury not yields and to increase in response to a decrease in 10-year Treasury note yields.
Holdings: The index is comprised of CBOT 10-YR Treasury futures September 2013 contracts.
What You Should Know:
- Barclays iPath is the sponsoring bank.
- DTYS has a 0.75% expense ratio.
- The ETN is up 21.6% over the past month, up 23.4% over the last three months up 21.1% year-to-date and up 18.0% over the past year.
- “There is no guarantee that the index level will decrease or increase by 1.00 point for every 0.01% change in the level of the underlying U.S. Treasury note or bond yield,” according to iPath.
- “Reasons why this might occur include: market prices for underlying U.S. Treasury note or bond futures contracts may not capture precisely the underlying changes in the U.S. Treasury note or bond yield; the index calculation methodology uses approximation; and the underlying U.S. Treasury note or bond weighting is rebalanced monthly,” according to iPath.
- The fund is an exchange traded note. [ETNs]
- An ETN is essentially an uncollateralized loan to an investment bank and leaves investors open to potential credit risks of the issuing bank – if the bank goes under, there is no guarantee that the ETN investor will receive all of his or her principle back.
Next page: The latest news
The Latest News:
- The yield on benchmark 10-year Treasury notes was hovering around 2.54% Wednesday.
- The 10-year Treasury yield reached as high as 2.64% earlier this week.
- “For the past month, the bond market has seen some of its worst carnage since 1994 for those who remember that frustrating and challenging year,” Paul Schatz, president of Heritage Capital, said in a USA Today article. “Yields are up more than 50% on the 10-year note and when bond mutual fund investors get their June statements, I think they will be shocked at how much money they lost in such a short period of time.”
- Treasury prices, though, gained Wednesday on disappointing Q1 GDP data.
- “That has the market thinking that the Fed will not be tapering perhaps as soon as what the market was thinking just the other day,” Stith, co-manager of the Wilmington Broad Market Bond Fund, said in a Reuters article.
iPath US Treasury 10-year Bear ETN
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.