For those looking for a supercharged bet against Treasury prices, the ProShares UltraShort 20+ Year Treasury (NYSEArca: TBT) provides a -200% return of long-term Treasuries. TBT is up 24.1% year-to-date. The ProShares UltraPro Short 20+ Year Treasury (NYSEArca: TTT) and Direxion Daily 20-Year Treasury Bear 3X (NYSEArca: TMV) reflect -300% return on long-term Treasuries.
Looking at intermediate-term, inverse Treasury bond options, the the ProShares Short 7-10 Year Treasury (NYSEArca: TBX) tries to track the inverse, or -100%, daily performance of the Barclays U.S. 7-10 Year Treasury Bond Index. Leveraged options include the ProShares UltraShort 7-10 Year Treasury (NYSEArca: PST) tries to track two times the inverse, or -200%, daily performance of the Barclays U.S. 7-10 Year Treasury Bond Index, and the Direxion 7-10 year Treasury Bear 3x (NYSEArca: TYO), which takes a triple inverse, or -300%, position. [Inverse Treasury ETFs Thrive as Rates Soar]
Traders considering these products should be aware that the inverse and leveraged products try to achieve their objective on a daily basis, and due to compounding of daily returns, the performance of the ETFs may diverge from the target return over extended periods, especially during volatile market conditions.
“When it comes to leveraged fund products that track daily results, their returns over time are the product of a series of daily returns,” according to Direxion. “They are not the fund’s leverage point multiplied by the cumulative return of the index for periods greater than a day. During periods of high volatility where markets lack a directional trend, returns can be impacted in a negative way should the funds be held for long periods.”
For more information on Treasuries, visit our Treasury bonds category.
Max Chen contributed to this article.