Thoughts on TBF:US

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Question asked 14/04/2022

Thoughts on TBF:US

James and team, I really appreciate your daily commentary and find it compliments information I receive from other investment information sources. I have been particularly interested in your Fixed Interest commentary as it is an investment class that I do not understand particularly well. To this end I am invested directly in bonds through FIIG and also in TBF:US. Given the significant volatility in this asset class, I am wondering what your current view is on TBF:US. Thanks again.

Answer

Hi Ian, thanks for the kind words.

The TBF is the Proshares Short 20+ year Treasury ETF – it shorts bonds which means it is long bond yields. The majority of bonds are fixed rate so carry duration risk. i.e. when rates go up, bond prices fall and the longer dated the bond the bigger the influence. The TBF would work as an interest rate hedge against the interest rate risk in a bond portfolio, in other words, it makes sense here. In the short term, I suspect the price of the TBF may pullback as yields pullback, however over time interest rates are likely to track higher and this security benefits from that theme.

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Proshares Short 20+ Year Treasury ETF (TBF US)

LAST UPDATED 14/04/2022 11:40

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