Inverse Bond

Inverse bond mutual funds and ETFs seek to generate returns equal to... Inverse bond mutual funds and ETFs seek to generate returns equal to an inverse fixed multiple of short-term returns of a fixed-income index. For example, a -2x 10-year U.S. Treasury ETF would aim to return twice the inverse return of 10-year U.S. Treasury bond index. If 10-year U.S. Treasury bonds fall 1%, the daily return of a -2x fund should be 2%. On the other hand, if 10-year U.S. Treasury bonds rise 1%, the corresponding ETF should fall by 2%. These funds can be particularly risky given the use of leverage and short positions (bets against an asset). As such, they should only be held by experienced traders on a very short-term basis. Long-term, conservative-minded investors should instead look to invest in a unleveraged fixed income ETF or mutual fund, which simply buys or holds (aka takes long positions) traditional debt securities. Last Updated: 12/27/2024 View more View less

Inverse bond mutual funds and ETFs seek to generate returns equal to an inverse fixed multiple of short-term returns of a fixed-income index. For example, a -2x 10-year U.S. Treasury ETF would aim... Inverse bond mutual funds and ETFs seek to generate returns equal to an inverse fixed multiple of short-term returns of a fixed-income index. For example, a -2x 10-year U.S. Treasury ETF would aim to return twice the inverse return of 10-year U.S. Treasury bond index. If 10-year U.S. Treasury bonds fall 1%, the daily return of a -2x fund should be 2%. On the other hand, if 10-year U.S. Treasury bonds rise 1%, the corresponding ETF should fall by 2%. These funds can be particularly risky given the use of leverage and short positions (bets against an asset). As such, they should only be held by experienced traders on a very short-term basis. Long-term, conservative-minded investors should instead look to invest in a unleveraged fixed income ETF or mutual fund, which simply buys or holds (aka takes long positions) traditional debt securities. Last Updated: 12/27/2024 View more View less