During the financial downturn and the ensuing recession treasuries rallied sharply sending bond yields to their lowest level since the early 70’s.  Now that the economy has begun to come back to life and the fed stimulus has driven commodity prices to multi-year highs, bond yields are beginning to rise.  This has caused investors to look through the various short bond ETF products to find the best way to capitalize on falling bond prices.

There are several different options to choose from depending upon whether you want Double, Triple or No Leverage in your position.  The first two products are sponsored by ProShares and trades under the ticker symbol TBF.  It does not use leverage and is  designed to be the exact inverse of the most popular long treasury ETF – TLT.   It is the least popular short treasury etf but still has good trading volume.

The second product is the Double Short Treasury also sponsored by ProShares – TBT.  It’s designed to be a 200% inverse of TLT, so if TLT falls 1% on a given day TBT is supposed to rise 2%.  TBT is designed for trading so it is very popular with traders, with average daily trading volume of 15 million per day.

The third is also popular with traders because it offers 3 to 1 leverage  but only has 1/10th the daily trading volume of TBT at this point.   It’s sponsored by Direxion and trades under the ticker symbol TMV.  It is designed to move the inverse TLT the same as TBT but it’s 300% instead of 200%.

One thing to know about these instruments is that they are designed to be trading tools, not long term investments.  If you hold them for longer periods of time the negative effect of the derivatives becomes very obvious.  The site below will show how these various short treasury ETFs have performed compared to each other.

Information Source:  http://bond-etfs.com