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How to capitalize on rising inflation: two promising bond ETFs

Inflation data was released in mid-May, causing investors to be cautious. In the United States, price growth reached 4.2 per cent year on year, exceeding the target of 2 per cent. At their most recent meeting, the Fed stated that they do not intend to change their quantitative easing (QE) policy as they deem the current rise in inflation to be only temporary.

However, if significant asset repurchases continue, the negative trend in inflation growth may persist, prompting authorities to reduce the QE program and raise interest rates. Bond prices will fall as a result, with long-term bonds taking the most substantial hit. However, investors still can profit from the trend: numerous prominent investing firms offer ETFs for short positions in long-term bonds. TBT.US and TBF.US are two of the most intriguing offerings.

1. ProShares Short 20+ Year Treasury

Current price: $17.68

Ticker: TBF.US

Investors can take a short position in long-term bonds with the help of an ETF. The dynamics of The ICE US Treasury 20+ Year Bond Index are reflected in the fund. EFT TBF.US can exhibit positive dynamics if interest rates are expected to rise, and it can be a helpful strategy for portfolio protection in the face of rising inflation. The asset has additional risks: if the QE program is delayed and interest rates remain low, the circumstance will lead to substantial negative trends in TBF.US

Key facts:

Assets under management, AUM - $0.58 billion

Expense Ratio - 0.94%.

The number of names of shares in ETF is 40.

Leverage - (-1x).

Yield to maturity, Weighted Average Yield to Maturity - 2.39%.

Weighted Average Maturity - 25.9 Y.

Modified Duration - 18.8 Y.

Volatility - 12.56%.

The instruments with the highest allocation in ETFs:

  • US Treasury Bonds, 3.375%, 11.15.2048 (3.95%);
  • US Treasury Bonds, 3%, 02.15.2049 (3.94%);
  • US Treasury Bonds, 2.875%, 05.15.2049 (3.88%);
  • US Treasury Bonds, 3%, 08.15.2048 (3.68%);
  • US Treasury Bonds, 2.25%, 08.15.2049 (3.44%).

ETF yield since the beginning of the year - 12.04%.

2. ProShares UltraShort 20+ Year Treasury

Current price: $20.65

Ticker: TBT.US

ETF TBT.US is nearly a replica of ETF TBF.US and mirrors The ICE US Treasury 20+ Year Bond Index dynamics. The primary difference is that ProShares UltraShort offers double leverage, which increases investors' risk.

Key facts:

Assets under management, AUM - $1.40 billion

Expense Ratio - 0.92%.

The number of names of shares in ETF is 40.

Leverage - (-2x).

Yield to maturity, Weighted Average Yield to Maturity - 2.39%.

Weighted Average Maturity - 25.9 Y.

Modified Duration - 18.8 g.

Volatility - 12.56%.

The instruments with the highest allocation in ETFs:

  • US Treasury Bonds, 3.375%, 11.15.2048 (3.95%);
  • US Treasury Bonds, 3%, 02.15.2049 (3.94%);
  • US Treasury Bonds, 2.875%, 05.15.2049 (3.88%);
  • US Treasury Bonds, 3%, 08.15.2048 (3.68%);
  • US Treasury Bonds, 2.25%, 08.15.2049 (3.44%).

ETF yield since the beginning of the year - 25.76%.

How to Buy ETFs?

If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.

After opening an account, you can buy ETFs in either of the following ways:

Freedom24 Web Platform: In the Web Terminal section, type TBF.US (ProShares Short 20+ Year Treasury  ticker), TBT.US (ProShares Short 20+ Year Treasury ticker) in the search box, and select the appropriate ETF in the results. Open a secure session in the trading window on the right, select the number of securities you want to buy, and click Buy.

Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type TBF.US (ProShares Short 20+ Year Treasury ticker), TBT.US (ProShares Short 20+ Year Treasury ticker), and select the appropriate ETF in the results. You will then see the ETF in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of securities you want to buy and click Buy.


Go to Freedom24 web platform >>


*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.