ProShares rolls out 10-year long/short breakeven inflation ETFs

Feb 10th, 2012 | By | Category: Alternatives / Multi-Asset

ProShares, a US-based ETF provider well known for leveraged and inverse funds, has launched the ProShares UltraPro 10 Year TIPS/TSY Spread ETF (UINF) and the ProShares UltraPro Short 10 Year TIPS/TSY Spread ETF (SINF), the first ETFs linked to 10-year breakeven inflation.

ProShares rolls out 10-year long/short breakeven inflation ETFs

ProShares has launched a pair of leveraged long/short 10-year breakeven inflation ETFs.

Breakeven inflation is a widely followed measure of inflation expectations and aims to isolate the market’s expectation of inflation implied by the difference in yields between TIPS and Treasury bonds.

The fund’s reference benchmark is the Dow Jones Credit Suisse 10-Year Inflation Breakeven Index. The index measures changes in the long-term inflation expectations implied by the US government bond market.

The index essentially tracks the difference in returns of 10-year TIPS bonds and a duration-adjusted position in the closest maturity Treasury to the TIPS.

UINF seeks to provide 3x the daily performance of the Dow Jones Credit Suisse 10-Year Inflation Breakeven Index, before fees and expenses. SINF seeks to provide -3x the daily performance of the Dow Jones Credit Suisse 10-Year Inflation Breakeven Index, before fees and expenses.

“Many investors carefully watch 10-year breakeven inflation but have not had access to a liquid and transparent way to act on their views,” said Michael L. Sapir, Chairman and CEO of ProShare Advisors. “Now, for the first time, investors can try to take advantage of swings in 10-year inflation expectations with an ETF.”

Historically the volatility of 10 year breakeven inflation has been relatively low. Magnifying the daily movements of 10-year breakeven inflation by 3x or -3x over the past five years results in annualised volatility roughly comparable to that of the S&P 500.

Commenting, Michael A. Petronella, President of Dow Jones Indexes, said, “The Dow Jones Credit Suisse Inflation Breakeven Indexes are effective tools that aim to describe the market’s changing view on US long-term inflation. The indexes provide a reference point for investors seeking to understand market expectations for future inflation levels.”

The launch of UINF and SINF follows ProShares’ launch last month of RINF and FINF, the first 30-year breakeven inflation ETFs.

The funds are listed on the NYSE Arca and have an expense ratio of 0.75%.

Tags: ,

Leave a Comment



More in Alternatives / Multi-Asset
SIX Switzerland Swiss Real Estate Property
SIX launches SXI Swiss Real Estate All Shares Index

SIX Swiss Exchange has introduced the SXI Real Estate All Shares Index, tracking the performance of companies operating within the real estate sector...

Tradeweb reports strong buying of fixed income ETFs during August
ETF Securities comments on outlook for the euro

By Martin Arnold, global FX & commodity strategist at ETF Securities. European Central Bank (ECB) President Draghi wants to engineer a smooth transition...

Close