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Inverse Treasury ETF ‘TBT’ Hauls In Assets

The ProShares UltraShort 20+ Year Treasury ETF (NYSEArca:TBT), a double-exposure inverse play on long-dated U.S. Treasurys, was one of the most popular funds last Thursday, seeing assets jump nearly 6 percent on the same day both the S&P 500 and the Dow Jones industrial average rallied to record highs.

Investors poured $187 million into TBT, making it the second-most-popular ETF Thursday, pushing total assets up to $3.43 billion. The inflows into the world's biggest inverse and leveraged fund also helped propel ProShares, the fund's sponsor, to leading issuer in terms of inflows that day. Markets were closed Friday.

TBT is designed to serve up twice the inverse daily performance of the Barclays U.S. 20+ Year Treasury Bond Index, the same benchmark anchoring the $3.4 billion iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca:TLT), which interestingly, was also among the day's top-10 ETFs , with inflows of $47 million.

The flows came on the same day the S&P 500 Index managed to break above its 2007 high and close at a new record in what many see as a reflection of a growing sense that the U.S. economy is in a bona fide recovery mode following the 2008 credit crisis.

Renewed enthusiasm over U.S. equities has certainly fueled concerns over the longer-term prospects for the bond market, as rallying stocks might put pressure on long-term bond yields. Still, there's still evidence the Treasurys market is perfectly healthy, as recent data showing foreign central banks are big buyers suggest.

The Federal Reserve has vowed to keep official interest rates and long-term yields low to help encourage borrowing and spur economic activity, but there's growing uncertainties surrounding the unwinding of quantitative easing measures that will help push up bond yields, possibly with swiftness.

Investor demand for both TBT and TLT could also be an indication of trending in the bond market, IndexUniverse ETF analysts have suggested, pointing to a possible play on momentum in the space.

TBT, as noted, is the largest geared ETF on the market today, having seen net inflows of $386.6 million year-to-date.

TLT, too, has gathered a sizable following, with net inflows exceeding $525 million in the same three-month period, according to data compiled by IndexUniverse.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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