Judging by the price action by and inflows to ZROZ and EDV, investors are not yet concerned about long-term rates moving higher. ZROZ and EDV are up 14.3% and 12.5%, respectively this year. The pair have taken in about $91 million combined in new assets.
ZROZ and EDV, like nearly every other investment, are not free lunches. Long-term interest rates have only resided at current levels once before, from 1934 to 1956.
Additionally, if the Fed proceeds with raising short-term rates without doing the same to long-term rates, the yield curve could become inverted, a condition that is often a precursor to a recession.
PIMCO 25+ Year Zero Coupon US Treasury ETF
