Exchange traded funds (ETFs) tied to the US Treasury have been available for quite some time now. They offer investors yet another way to diversify their portfolios while also providing a little more flexibility over traditional treasury investments.
Barclays offers 3 treasury ETFs. They are: iSHARES Lehman 20+ Year Tsy Bond Fund (TLT), iSHARES Lehman 7-10 Year Tsy Bond Fund (IEF), and iSHARES Lehman 1-3 Year Tsy Bond Fund (SHY). As you can probably tell by the names, the key difference among them is the maturity date. The maturity date affects the income as well as the day-to-day volatility with shorter term bonds being less volatile than the longer term bonds.
As I wrote in my bond ETF posting, I hold two bond ETFs in my portfolio. I don't have any of the three listed above, my the aggregate bond ETF I do have includes a portion of its holdings in treasuries with varying maturities. My other bond ETF focuses on the corporate bond market. These two ETFs are sufficient for my diversification needs especially since my current age and financial situation allows me to target equity-style investments.
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I second that, I know of TBT but it's leveraged 2X. There must be an unleveraged one.
I am looking for an ETF to short long term treasuries. I am not interested in the leveraged or 2X. I just want to take a position on the rising long term rates. Thanks
Try:
SHV
SHV is a LONG-POSITION fund for SHORT-TERM Treasuries (Treasury notes right now). It isn't a way to sell Treasuries short. Incidentally, I'm also looking for an unlevered way to short T-bonds, and I haven't found anything yet.
[QUOTE http://us.ishares.com/product_info/fund/overview/SHV.htm
The iShares Barclays Short Treasury Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the short-*****term***** sector of the United States Treasury market as defined by the Barclays Capital U.S. Short Treasury Bond Index.
[/QUOTE]
simply go and short TLT - is can easily be borrowed by your broker
1. Is shorting SHY shares exactly equivalent to buying SHV shares or is there some subtle difference or motivation for selecting one over the other?
2. Do SHV shares get interest or like stock shorts, the interest (or dividends) goes to the owner?
3. If you short TLT, doesn't the owner, not you the borrower, get the interest?
4. For purposes of taking a position against rising interest rates, is the longer term better than the shorter term?
5. In comparing SHY v SHV graphs, there did not seem to be the expected inverse correlation. In the last year, SHY seemed quite volatile, while SHV seemed almost flat.