With yields rising and many anticipating an imminent Federal Reserve interest rate hike, bond investors can consider an alternative, strategic interest-rate-hedging exchange traded fund strategy to diminish the negative effects of the Fed’s expected rate normalization.
The Sit Rising Rate ETF (NYSEArca: RISE) brings an institutional-level interest rate hedging strategy to everyday investors. The fund has already increased over 5% since the presidential election as yields on benchmark 10-year Treasury notes now hovering around 2.39%.
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.
Specifically, RISE is designed to capitalize on rising rates by utilizing derivatives hedges tied to two-, five- and 10-year U.S. Treasuries.[related_stories]