Wednesday, August 31, 2011

TBF Comparison to 30 year Treasury Yield

Up until mid 2009, the only inverse long bond ETF that a bond bear could utilize was TBT.  TBT is a 2x inverse ETF though, and due to the properties of double levered ETFs, it has been a particularly poor long term holding.  A TBT holder who bought in January '09 has lost 30% even though the 30 year bond yield is about 40% higher over the same period.  

In 2010, ProShares introduced a non-levered inverse long bond ETF, TBF.  For someone with a long term view that rates will rise, this may be a better instrument than TBT.  Below is a comparison of the longer term performance of TBF vs. the yield on the 30 year treasury bond ($TYX).  The two have tracked much more closely than TBT over time.

Click to Enlarge.
(Unfortunately the scale is slightly skewed because the two series are plotted on separate axes.)

No comments:

Post a Comment

For compliance reasons, I don't post comments to the site, but I do like hearing from readers and am happy to answer any questions. Feel free to use the comment box to get in touch. Please leave an email address in your comment so that I can write back, or email me directly at