In the fixed-income world, Treasury yields have taken short-interest from traders and ETNs with short strategies in Treasuries have been capitalizing, such as these three ETFs–the iPath US Treasury 10-Year Bear ETN (NASDAQ: DTYS), the iPath US Treasury Bond Bear ETN (NASDAQ: DLBS), and the Barclays Inverse U.S. Treasury Composite ETN (NASDAQ: TAPR).
Looking at the 10-year Treasury yield year-to-date, it’s down 7.7 percent after touching a high of 3.11% on May 17. ETNS like DTYS, DLBS and TAPR have been able to take advantage of their short strategies on the 10-year Treasury and others.
1. iPath US Treasury 10-Year Bear ETN
DTYS gives investors inverse exposure to the Barclays 10Y US Treasury Futures Targeted Exposure Index, which is designed to decrease in response to an increase in the 10-year Treasury note yields. Furthermore, it increases in response to a decrease in 10-year Treasury note yields. The underlying index that DTYS tracks focuses on a fixed level of sensitivity to changes in the yield of the current “cheapest-to-deliver” note underlying the relevant 10-year Treasury futures contract at a given point in time. DTYS has been a stellar performer with a 20% return year-to-date.
2. iPath US Treasury Bond Bear ETN
DLBS seeks to provide investors with inverse exposure to the Barclays Long Bond US Treasury Futures Targeted Exposure Index, which is designed to decrease in response to an increase in the long-dated Treasury bond yields. The index also increases in response to a decrease in long-dated Treasury bond yields. DLBS has been generating returns of 17.10% year-to-date.
3. Barclays Inverse U.S. Treasury Composite ETN
TAPR seeks a return linked to the performance of the Barclays Inverse US Treasury Futures Aggregate Index, which employs a strategy that tracks the sum of the returns of periodically rebalanced short positions in the 2-year, 5-year, 10-year, long-bond and ultra-long U.S. Treasury futures contracts. TAPR has gained 15.09% thus far this year.
High-Yield Corporate Strategies
In addition to these short Treasury strategies, investors may also want to diversify their fixed-income portfolios with high-yielding fixed-income ETFs that carry higher credit risks in addition to the higher yields. Three ETFs worth considering in this space are WisdomTree Interest Rt Hdg Hi Yld Bd ETF (NASDAQ: HYZD)–up 1.36% year-to-date, USDXtrackers Hi Yld Cor Bd Intst Rt Hdg ETF (BATS: HYIH)–up 1.58% year-to-date and SPDR Blmbg BarclaysST HY Bd ETF (NYSEArca: SJNK)–up 1.20% year-to-date.
For more fixed-income strategies, visit ETFTrends.com.