Inverse Treasury Bond Funds

Discussion in 'ETFs' started by hoodooman, Jun 6, 2013.

  1. Butterball

    Butterball

    Shorting bonds can be expensive over the very long term. However, the lower the rates the cheaper it is. You're "paying" the coupons to the bond holders. Being long a 2x inverse 10y treasury ETF @ 2.5% interest rate plus ETF fees can cost approx. 6.5% annualized. That's a steep hurdle to overcome.

    Your potential gain comes from an abrupt rise in rates. Over time, the losses on coupons can outweigh potential gains on "slow" rate increases.
     
    #11     Jul 31, 2013
  2. memshu

    memshu

    1650 on the AXTWEN? 1700? 1750?
     
    #12     Oct 27, 2013
  3. xandman

    xandman

    No sure bets. A steep rise in rates will probably tank the fragile real estate/consumer economy, unless we have fantastic job growth.

    Also, better to lighten up on equities than trade another overly expensive ETF. Long NLY, btw.
     
    #13     Dec 1, 2013