With the Federal Reserve planning to steadily hike interest rates and normalize its monetary policy ahead, investors should consider a strategic interest-rate hedging exchange traded fund that gives could potentially continue to benefit from higher rates.
Fixed-income investors have utilized long-short bond strategies to diminish rate risk, and the Sit Rising Rate ETF (NYSEArca: RISE) implements such a investment theme by bringing an institutional-level interest rate hedging strategy to everyday investors.
RISE has already increased 5.6% since the presidential election as yields on benchmark 10-year Treasury notes pushed to 2.61%.
The Sit Rising Rate ETF is designed to capitalize on rising rates by holding derivative hedges tied to two-, five- and 10-year U.S. Treasuries.
The weighting of the Treasury Instruments constituting the Benchmark Portfolio Index will be based on each maturity’s duration contribution. The expected range for the duration weighted percentage of the 2 year and 5 year maturity Treasury Instruments will be from 30% to 70%. Additionally, the expected range for the duration weighted percentage of the 10 year maturity Treasury Instruments will be from 5% to 25%, according to Rise.