TBF
1x Short
ProShares Short 20+ Year Treasury
Shorts: Long Treasuries (TLT)
Expense Ratio
0.93%
Leverage
1x Inverse
Issuer
ProShares
Inception
Aug 2009
Inverse ETF Risk
TBF is an inverse ETF designed for short-term hedging and trading. It resets daily and may not track the inverse of its index over longer periods.
What TBF Shorts
The TBF ETF shorts long-dated U.S. Treasury bonds, specifically those tracked by the ICE U.S. Treasury 20+ Year Bond Index (the underlying for TLT).
It is a 1x inverse ETF, designed to deliver the opposite of the daily performance of its benchmark. It uses derivatives like swaps and futures to achieve this goal.
Key Risks
- Daily Reset Risk: Returns can diverge significantly from the inverse of the underlying's long-term return due to daily compounding.
- Interest Rate Risk: Profits if long-term rates rise, but can incur heavy losses if rates fall and bond prices rally.
- High Expense Ratio: The 0.93% fee is high for a bond ETF and erodes returns over time.
- Counterparty Risk: Relies on derivatives contracts with other financial institutions.
- Volatility Risk: Long-term Treasuries can be highly volatile, magnifying potential gains and losses.
Best Use Cases
- Tactical hedge for investors with a strong conviction that long-term interest rates will rise.
- Portfolio hedge for investors seeking short-term protection against a bond market sell-off.
- Sophisticated tool for expressing a bearish view on long-duration Treasury prices.
Similar Instruments
Frequently Asked Questions
Is TBF a good long-term investment?
No. Due to daily reset compounding, TBF is designed for short-term trading or hedging (daily, weekly). It is not suitable for buy-and-hold investing.
What happens to TBF if interest rates fall?
If interest rates fall, long-term bond prices (like TLT) rise. Since TBF is inverse, it would typically decline in value.
Does TBF pay dividends or distributions?
TBF may make periodic distributions, but they are not typical dividend payments. They often result from interest earned on the fund's cash collateral or from rebalancing activities.