An Alternative Treasury ETF Strategy Betting on Rising Interest Rates

As markets brace for a rising interest rate environment, bond investors should begin to look to alternative investments, such as a strategic interest rate-hedging exchange traded fund, to limit the negative effects or even benefit from rising rates.

Specifically, fixed-income investors can utilize long-short bond strategies to diminish rate risk. The Sit Rising Rate ETF (NYSEArca: RISE) brings an institutional-level interest rate hedging strategy to everyday investors.

RISE is a “strategic interest rate hedging tool that gives investors the opportunity to benefit from the rise in the interest rates of U.S. Treasury notes,” according to Sit Investment Group.


New types of  zero duration or negative duration ETFs hold long-term bonds, but they will short Treasuries or Treasury futures contracts to hedge against potential losses if interest rates rise – bond prices have an inverse relationship to interest rates, so rising rates corresponds with falling bond prices.

SEE MORE: Benefits of Diversifying with a Liquid Alternative ETF Strategy