An ETF (exchange-traded fund) is a stock or bond index fund that trades on a stock exchange. TBT is the ticker symbol for a specific ETF called ProShares UltraShort 20+ Year Treasury.
ETFs
You buy and sell shares of an ETF in the same way that you buy and sell shares of an individual stock.
ETF Objective
The objective of an ETF is to track the performance of a specified market index. TBT tracks the performance of the Barclays Capital 20+ Year U.S. Treasury Index.
TBT Objective
According to ProShares, the daily objective of TBT is, before fees and expenses and interest income earned on cash and financial instruments, to get results that correspond to twice the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Index. In other words, if Barclays goes down 5 percent, then the goal of TBT is to go up 10 percent.
Reason
According to OTC Journal, the reason to own TBT is that you think interest rates for long-term U.S. Treasury bonds will increase.
Expert Insight
In the study "UltraShort Treasuries: How Long Can You Hold TBT?" author Matthew Hogan concluded TBT performs well over a day, a week or even a month, but that the performance declines in the long term.
