Bond trading can be tricky, especially in today’s raucous market where investors have been piling into bonds like coronavirus preppers have been piling into toilet paper. Unlike the latter, however, exchange-traded funds (ETFs) can help investors with bond pricing with its liquidity.
“An ETF’s liquidity is really a function of the underlying liquidity of the asset class,” said Andrew McOrmond, managing director of ETF trading solutions at WallachBeth Capital, told CNBC’s “ETF Edge”. “Although there [were]bids seen on the market, in the bond market [and]in the corporates, they weren’t simply able to be actionable or able to have depth. So, market makers were not able to accurately hedge.”
Compared to mutual funds, fixed income investors are able to get in and out of bonds with relative ease.
“A mutual fund you cannot get in and out of during the day, and these ETFs held up by giving people the right to sell if they wanted to,” McOrmond said. “People that sold earlier in the day in those bonds, in those bond funds, just happened to time it correctly.”
Levering Up 3x with Treasurys
Here are four ETFs to trade Treasurys:
- Direxion Daily 20+ Year Treasury Bull 3X Shares (NYSEArca: TMF): seeks daily investment results, before fees and expenses, of 300% of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. The index is a market value weighted index that includes publicly issued U.S. Treasury securities that have a remaining maturity of greater than 20 years.
- Direxion Daily 20+ Year Treasury Bear 3X ETF (NYSEArca: TMV): seeks daily investment results before fees and expenses of 300% of the inverse (or opposite) of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. The index is a market value weighted index that includes publicly issued U.S. Treasury securities that have a remaining maturity of greater than 20 years.
- Direxion Daily 7-10 Year Treasury Bull 3X Shares (NYSEArca: TYD): seeks daily investment results, before fees and expenses, of 300% of the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index. The index is a market value weighted index that includes publicly issued U.S. Treasury securities that have a remaining maturity of greater than seven years and less than or equal to ten years.
- Direxion Daily 7-10 Year Treasury Bear 3X Shares (NYSEArca: TYO): seeks daily investment results before fees and expenses of 300% of the inverse (or opposite) of the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index. The index is a market value weighted index that includes publicly issued U.S. Treasury securities that have a remaining maturity of greater than seven years and less than or equal to ten years.
For more market trends, visit ETF Trends.
