ProShares UltraShort 20+ Year Treasury (TBT)

QUOTE AND NEWS
Clusterstock  Mar 27  Comment 
It's only March 27, but Wall Street is already getting one of its biggest calls of the year all wrong: The death of the bull market in bonds. The election of Donald Trump as president sparked an exodus from the US Treasury market in the final...
Clusterstock  Mar 8  Comment 
The US Treasury market is under pressure on Wednesday after the blowout ADP private payrolls report showed the addition of 298,000 jobs in February. That was well ahead of the 187,000 print that economists were expecting and marked a big jump up...
DailyFinance  Mar 2  Comment 
Filed under: Lifestyle, Beauty, Hair Kids used to have it so easy. Remember when you'd wake up for school, put on your overalls and throw your hair in a high scrunchie? Natural waves, frizz and curls were all the rage in the 90s (and earlier,...
Clusterstock  Mar 1  Comment 
The US Treasury complex has come under significant pressure following President Trump's speech to Congress, which renewed hope of a massive $1 trillion infrastructure spending plan. Selling has pushed yields up more than 7 basis points in the...
Clusterstock  Feb 15  Comment 
The US Treasury market is under pressure on Wednesday following a bunch of better than expected data. CPI, retail sales, and Empire manufacturing all topped estimates, causing sellers to continue their recent attack on the complex. The post-data...
Clusterstock  Feb 14  Comment 
US Treasury yields are climbing following the release of Fed Chair Janet Yellen's prepared remarks for her semiannual Humphrey-Hawkins testimony. In her statement, Yellen noted that " waiting too long to remove accommodation would be unwise,...
Clusterstock  Jan 25  Comment 
The US Treasury complex is under pressure on Wednesday as money continues to move out of safer assets and into riskier ones. Early selling has yields up about 4 basis points in the intermediate part of the curve and at their highest levels in a...
Clusterstock  Jan 17  Comment 
Treasurys are rallying sharply as traders return to work following the holiday weekend. Early buying has yields down more than 8 basis points in the belly of the curve as traders pile in following President-elect Donald Trump's comments on the...
Clusterstock  Jan 12  Comment 
The US Treasury complex is rallying on Thursday as money moves out of riskier assets and into safety. Buying has pushed yields down more than 6 basis points in the belly of the curve to their lowest levels since the beginning of December. Here's a...




 



ProShares UltraShort 20+ Year Treasury (TBT) is an Exchange Traded Fund (ETF) that allows buyers to benefit when long treasury interest rates rise. TBT seeks daily investment results, before fees and expenses and interest income earned on cash and financial instruments, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Index.

TBT's structure limits its usefulness for long-term investors. Time decay of option (and swap) values and relatively high expenses contribute to likely tracking errors.

Underlying Index

The Barclays Capital (formerly Lehman Brothers) 20+ Year U.S. Treasury Index includes all publicly issued, U.S. Treasury securities that have a remaining maturity greater than 20 years, are non-convertible, are denominated in U.S. dollars, are rated investment grade (at least Baa3 by Moody’s Investors Service or BBB- by S&P), are fixed rate, and have more than $250 million par outstanding. The Index is weighted by the relative market value of all securities meeting the Index criteria. Excluded from the Index are certain special issues, such as flower bonds, targeted investor notes (TINs), U.S. Treasury inflation protected securities (TIPs), state and local government series bonds (SLGs), and coupon issues that have been stripped from assets already included. [1]

From inception to year-end 2008, TBT's daily change correlation with IShares Lehman 20 Year Treasury Bond Fund (TLT) was -0.98.

Principal Investment Strategies

ProShares UltraShort 20+ Year Treasury’s principal investment strategies include[2]:

  • Taking positions in financial instruments (including derivatives) that ProShare Advisors believes, in combination, should have similar daily return characteristics as twice (200%) the inverse of the Barclays Capital 20+ Year U.S. Treasury Index.
  • Committing at least 80% of its net assets, including any borrowings for investment purposes, to investments that, in combination, have economic characteristics that are inverse to those of the Index.
  • Employing leveraged investment techniques in seeking its investment objective.
  • Investing assets not invested in financial instruments in debt instruments and/or money market instruments.

In practice, TBT sells leveraged 20+ Treasury swaps. [3]

Creation and Redemption of Creation Units

The fund issues and redeems Shares on a continuous basis at Net Asset Value (NAV) in large, specified numbers of Shares called “Creation Units.” This mechanism is intended to prevent large premiums or (especially) discounts from NAV. Creation Units of the Ultra ProShares are issued and redeemed principally in-kind for securities included in the relevant underlying index and an amount of cash. Except when aggregated in Creation Units, shares are not redeemable securities of the fund. Retail investors, therefore, generally will not be able to purchase or redeem shares directly from or with the fund. Rather, most retail investors will purchase or sell shares in the secondary market.

Volatility and Interest Rate Risk

Interest rate risk is the risk that debt securities or certain financial instruments may fluctuate in value due to changes in interest rates. The value of securities with longer maturities may fluctuate more in response to interest rate changes than securities with shorter maturities. TBT's leverage then doubles this extreme (by Treasury market standards, anyway) volatility.



ETF Name ETF Name Fund Manager
ProShares UltraShort Lehman 20+ Year Treasury Bond ETF (TBT)ProShares UltraShort Lehman 20+ Year Treasury Bond ETF (TBT)ProShares ETFs
Ameristock/Ryan 1 Year Treasury ETF (GKA)Ameristock/Ryan 1 Year Treasury ETF (GKA)Ameristock Funds
Ameristock/Ryan 10 Year Treasury ETF (GKD)Ameristock/Ryan 10 Year Treasury ETF (GKD)Ameristock Funds
Ameristock/Ryan 2 Year Treasury ETF (GKB)Ameristock/Ryan 2 Year Treasury ETF (GKB)Ameristock Funds
Ameristock/Ryan 20 Year Treasury ETF (GKE)Ameristock/Ryan 20 Year Treasury ETF (GKE)Ameristock Funds
Ameristock/Ryan 5 Year Treasury ETF (GKC)Ameristock/Ryan 5 Year Treasury ETF (GKC)Ameristock Funds
Ext Duration Treasury ETF (EDV)Ext Duration Treasury ETF (EDV)Vanguard Group Inc
iShares Lehman 1-3 Year Treasury Bond Fund (SHY)iShares Lehman 1-3 Year Treasury Bond Fund (SHY)iShares
iShares Lehman 20+ Year Treasury Bond Fund (TLT)iShares Lehman 20+ Year Treasury Bond Fund (TLT)iShares
iShares Lehman 7-10 Year Treasury Bond Fund (IEF)iShares Lehman 7-10 Year Treasury Bond Fund (IEF)iShares
ProShares UltraShort Lehman 20+ Year Treasury Bond ETF (TBT)ProShares UltraShort Lehman 20+ Year Treasury Bond ETF (TBT)ProShares ETF
ProShares UltraShort Lehman 7-10 Year Treasury Bond ETF (PST)ProShares UltraShort Lehman 7-10 Year Treasury Bond ETF (PST)ProShares ETF


References

  1. http://media.proshares.com/documents/ProSharesProspectus.pdf
  2. http://media.proshares.com/documents/ProSharesProspectus.pdf
  3. TBT Holdings http://www.proshares.com/funds/tbt.html?Daily+Holdings
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