Following ProShare Advisors' roll out last month of the first 30-year breakeven inflation exchange-traded funds, the company now offers a 10-year version.
ProShares UltraPro 10 Year TIPS/TSY Spread (NYSE: UINF) and ProShares UltraPro Short 10 Year TIPS/TSY Spread (NYSE: SINF) are the first ETFs linked to 10 year breakeven inflation (BEI)—a widely followed measure of inflation expectations.
The duo seek to provide 3x the daily performance of the Dow Jones Credit Suisse 10-Year Inflation Breakeven Index, before fees and expenses. The ETFs list on NYSE Arca today.
"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 LLC, ProShares' investment advisor. "Now, for the first time, investors can try to take advantage of swings in 10 year inflation expectations with an ETF."
BEI's goal is to isolate the market's expectation of inflation implied by the difference in yields between Treasury Inflation Protected Securities (TIPS) and Treasury bonds. The Dow Jones Credit Suisse 10-Year Inflation Breakeven Index tracks the returns of a long position in 10-year TIPS and a short position in Treasury bonds.
Historically the volatility of 10 year BEI has been relatively low. Magnifying the daily movements of 10 year BEI by 3x or -3x over the past five years results in annualized volatility roughly comparable to that of the S&P 500.
ProShares introduction of UINF and SINF follows the company’s launch in January of RINF and FINF, the first 30 year BEI ETFs.
Mary Ann Tasoulas writes for Securities Technology Monitor.