Since “green shoots” of economic recovery first emerged in 2009, pundits have been predicting¬†doom-n-gloom for bond prices. Many assumed that record low interest rates meant that… sooner or later… they’d have to soar. After all, how else would the Fed control the inflation associated with a weakened U.S. dollar?
Of course, none of the rate predictions came to pass. Even the¬†downgrade to U.S. treasuries didn’t¬†send rates skyrocketing.¬†
Instead, abject revulsion for European sovereign debt¬†has pushed U.S. bond yields to¬†ridiculously low levels. And with the¬†Federal Reserve¬†focused on deflation through the purchase of treasury bonds in QE1, QE2 and “Operation Twist,”¬†bond prices have kept on¬†trucking.
So where does that leave¬†ETF investors who remain bearish, or who are becoming bearish, on fixed income? Fortunately, there are¬†assets¬†that should thrive if rates are rising, including¬†floating-rate loans via iShares Floating Rate (FLOT) and inflation-protected securities via¬†PIMCO 1-5 Year TIPS (STPZ).
Traders can¬†go for the short-selling gusto through ProShares UltraShort 20+ US Treasury (TBT). However, since it is a daily inverse tracker, traders will need to have a plan for taking profits or minimizing losses.
An ETF Portfolio For Fixed-Income Bears¬†‚Äď Mark McLaughlin, CNBC
A Money Market Alternative For ¬†Zero Interest-Rate World ‚Äď Samuel Lee, Morningstar
Top 10 Technology ETFs ‚Äď Dave Fry, ETF Digest ¬†¬†
Three ETFs For A Nuclear Power Renaissance ‚Äď Staff, Minyanville
Permanent ETF Focuses On Steady Performance ‚Äď Roger Nusbaum, The Street ¬†
Disclosure Statement: ETF Expert¬†is a web log (‚ÄĚblog‚ÄĚ) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert disclosure details here.