TBT
2x Short
ProShares UltraShort 20+ Year Treasury
Shorts: Long Treasuries (TLT)
Expense Ratio
0.90%
Leverage
2x Inverse
Issuer
ProShares
Inception
May 2008
High Risk Leveraged Product
TBT is a 2x leveraged inverse ETF designed for short-term trading only. Daily rebalancing causes significant decay over time. NOT suitable for buy-and-hold investors.
What TBT Shorts
The ProShares UltraShort 20+ Year Treasury ETF (TBT) provides -2x the daily return of the ICE U.S. Treasury 20+ Year Bond Index. This index tracks long-dated U.S. Treasury bonds.
TBT uses derivatives like swaps and futures to achieve its inverse leveraged exposure. It is designed for short-term trading and resets its leverage daily, which causes compounding effects over longer periods.
Key Risks
- Leverage Risk: Daily compounding can cause returns to diverge significantly from 2x the index's return over periods longer than one day.
- Interest Rate Risk: If long-term Treasury prices rise (yields fall), TBT will lose value.
- Counterparty Risk: Exposure to derivatives contracts introduces risk if a swap dealer defaults.
- High Expense Ratio: The 0.90% fee is high for an ETF and erodes returns.
- Extreme Volatility: Designed for short-term use; holding during volatile markets can lead to steep, unexpected losses.
Best Use Cases
- Short-term speculation on rising long-term interest rates.
- Hedging a portfolio against losses in long-term Treasury bond holdings.
- Tactical, high-conviction bet against the price of bonds like TLT for a single day or a few days.
- Sophisticated investors seeking amplified inverse exposure to long-term U.S. government debt.
Similar Instruments
Frequently Asked Questions
Is TBT a good long-term investment?
No. TBT is designed for daily returns. Due to daily leverage reset and compounding, its performance over weeks, months, or years can deviate dramatically from simply doubling the inverse of the long-term Treasury index, making it unsuitable for buy-and-hold investing.
What is the main difference between TBT and TBF?
TBT seeks -2x the daily index return, while TBF (ProShares Short 20+ Year Treasury) seeks -1x the daily return. TBT offers amplified inverse exposure but with higher risk and volatility.
How does TBT react when interest rates rise?
When interest rates rise, the price of long-term Treasury bonds (like TLT) typically falls. Since TBT shorts these bonds, it should generate a positive return on that day, aiming for twice the inverse of the index's daily move.