Would you put some of your bond money in the TBF?

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rec7
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Would you put some of your bond money in the TBF?

Post by rec7 »

ProShares Short 20+ Year Treasury ETF TBF. Please list your reasons pro or con. Thanks in advance.
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Phineas J. Whoopee
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Re: Would you put some of your bond money in the TBF?

Post by Phineas J. Whoopee »

rec7 wrote:ProShares Short 20+ Year Treasury ETF TBF. Please list your reasons pro or con. Thanks in advance.
Only what I wanted to lose.

Notice I didn't say am willing. I said wanted. Because that's what happens with short ETFs. Search the forum for threads.

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Langkawi
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Re: Would you put some of your bond money in the TBF?

Post by Langkawi »

Phineas J. Whoopee wrote:
rec7 wrote:
Only what I wanted to lose.

Notice I didn't say am willing. I said wanted.
Exactly. Going long the short ETF is not the same as going short the long ETF (e.g. TLT).
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rec7
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Re: Would you put some of your bond money in the TBF?

Post by rec7 »

The TBF is sometimes called a daily trader. It is up about 9.5% YTD if someone held it all that time. You are right about the TLT it is down about 13.5% they do not trade dollar for dollar what happened to that 4%? The TBF has a ER of about 1% but that leaves 3% unaccounted for.
FinancialDave
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Re: Would you put some of your bond money in the TBF?

Post by FinancialDave »

Langkawi wrote:
Phineas J. Whoopee wrote:
rec7 wrote:
Only what I wanted to lose.

Notice I didn't say am willing. I said wanted.
Exactly. Going long the short ETF is not the same as going short the long ETF (e.g. TLT).


TLT -- long bond

TBF -- short bond 1X exposure

TBT -- short bond 2X exposure

TTT -- short bond 3X exposure

The short bond exposure products are more suited to day trading as they are re-priced on a daily basis.

...edited.

fd
Last edited by FinancialDave on Wed Nov 06, 2013 12:01 pm, edited 3 times in total.
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rec7
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Re: Would you put some of your bond money in the TBF?

Post by rec7 »

FinancialDave wrote:
Langkawi wrote:
Phineas J. Whoopee wrote:
rec7 wrote:
Only what I wanted to lose.

Notice I didn't say am willing. I said wanted.
Exactly. Going long the short ETF is not the same as going short the long ETF (e.g. TLT).
This is exactly true but the main reason is because the TBF is a double leveraged short position.

TLT -- long bond

TBF -- short bond 2X exposure

TMV -- short bond 3X exposure

The TBF and TMV are more suited to day trading as they are re-priced on a daily basis.

fd
TBF is a single leveraged short position
http://www.proshares.com/funds/#sort=Na ... aredShort1
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Re: Would you put some of your bond money in the TBF?

Post by nisiprius »

rec7 wrote:ProShares Short 20+ Year Treasury ETF TBF. Please list your reasons pro or con. Thanks in advance.
I would not because

a) I typically let my investments go many many many days without "monitoring" them, and

b) ProShares says here that "Investors should monitor their holdings... as frequently as daily." In full:
This Short ProShares ETF seeks a return that is -1x the return of an index or other benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings consistent with their strategies, as frequently as daily. For more on correlation, leverage and other risks, please read the prospectus.
"differ in amount and possibly direction" means "can go down when you'd expect it to go up."
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Jim180
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Re: Would you put some of your bond money in the TBF?

Post by Jim180 »

rec7 wrote:The TBF is sometimes called a daily trader. It is up about 9.5% YTD if someone held it all that time. You are right about the TLT it is down about 13.5% they do not trade dollar for dollar what happened to that 4%? The TBF has a ER of about 1% but that leaves 3% unaccounted for.
I'm not sure where you got those performance numbers. MSN Money shows TBF +8.95% vs. TLT (-9.66%). The way to use TBF is as a "hedge" to reduce duration on your bond portfolio. If you think your duration is too high for your comfort level then you can either a)sell your bond funds and move to lower duration, or b) use TBF to lower duration. It's true it doesn't move exactly inverse with TLT, if that is important to you. Using your numbers for a moment, I'd rather be +9.5% than (-13.5%). I think the main reason for TBF is to give yourself a little downside protection. So as far as pros and cons go, the pro is that you can use TBF to reduce duration of your bond portfolio without selling your current holdings. The con is that TBF doesn't move dollar for dollar with TLT.
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