A leveraged/inverse fund that has become very popular with fixed income conscious ETF portfolio managers is TBT (ProShares UltraShort 20+ Year Treasury, Expense Ratio 0.95%) since its 2008 debut.
Even with the fund trading at its lowest levels since early February on this recent sharp move higher in longer term bond prices (and steep drop in yields), TBT has still pulled in more than $362 million in new assets year to date.
In fact, despite what most would believe is its “short term” or “trading nature”, TBT seems to hold intermediate to longer term assets rather well in terms of net creation/redemption activity over time, and the fund itself is now the third largest ETF across all U.S. listed ETPs that is classified in the “Treasuries” category in terms of AUM.
Related funds that allow the investor to bet against long bond prices include the $1.5 billion TBF (ProShares Short 20 Year Treasury, Expense Ratio 0.95%) which debuted in 2009 and is designed to provide unlevered short exposure to the Barclays Capital 20+ Year Treasury Index, and is essentially the unleveraged cousin of TBT.
For more aggressive traders and/or hedgers, Direxion’s TMV (Direxion Daily 20 Year Plus Treasury Bear 3X Shares, Expense Ratio 0.95%) is designed to deliver three times the daily inverse returns of the long bond, and in the past several sessions this fund has seriously taken it on the chin given the spike in bond prices.
TMV has had decent success since its 2009 debut as well, attracting about $604 million in assets under management thus far. ProShares launched a fund to compete with TMV in terms of delivering three times leverage, TTT (ProShares UltraPro Short20+ Year Treasury, Expense Ratio 0.95%) about two years ago in 2012, and the fund has attracted about $119 million since inception.
Likewise, PowerShares lists SBND (PowerShares 3X Short 25+ Year Treasury Bond ETN, Expense Ratio 0.95%, $51 million in AUM) which differs from the above choices in that it delivers monthly inverse leverage as opposed to daily.
If long term Treasury Bonds continue to break out in price (within shouting distance of early summer 2013 highs) it will be interesting to see if existing holders of TBT, TBF, TMV, SBND bail or perhaps double down on their bets against bond prices.
ProShares UltraShort 20+ Year Treasury
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