TLT returned roughly 1.5 percent over a one-year period, but TBT
was down almost 20 percent in the same period. So, with 14 inverse
Treasury funds now trading, itâs crucial for investors to really
understand how these products work.
Some fund issuers are attempting to mitigate the long-term effects
compounding by resetting the leverage
, instead of
. The recently launched triple-leveraged PowerShares DB 3X Short
25+ Year Treasury Bond ETN (NYSE Arca:SBND) is one such example.
But SBND also happens to be based on a futures index, which
introduces another variable that investors need to understand
clearly before jumping into such securities.
Investors do have various factors to consider when shorting
Treasurys through ETFs. But currently, no inverse funds currently
provide perfect one-for-one inverse exposure for the long-haul
because leveraged and inverse funds really arenât designed for
That said, for those intent on holding inverse funds for an
extended period to short Treasurys, all the volatility and
uncertainty these days means that non-leveraged inverse funds like
TBF might be a safer play than leveraged inverse funds such as
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