ProShares UltraPro Short 20+ Year Treasury (TTT)

Overview

The ProShares UltraPro Short 20+ Year Treasury (TTT) is a geared ETF that seeks daily investment results, before fees and expenses, that correspond to three times (3x) the inverse (opposite) of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. It aims to profit from declines in long-term Treasury bond prices, making it a short-term trading instrument. It does not invest directly in treasury bonds. It gains inverse exposure through derivatives.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a solid track record of providing these types of products to the market. They are considered reliable in delivering the stated objectives of their funds.

Management Expertise

ProShares has a dedicated management team experienced in managing leveraged and inverse ETFs, with expertise in using derivatives to achieve the desired investment outcomes.

Goal

To seek daily investment results, before fees and expenses, that correspond to three times (3x) the inverse (opposite) of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index.

Investment Approach and Strategy

Strategy: The ETF employs a leveraged inverse strategy, seeking to deliver 3x the inverse daily return of the ICE U.S. Treasury 20+ Year Bond Index. This involves using derivatives, primarily swap agreements, to achieve the desired leverage and inverse exposure.

Composition The ETF does not directly hold Treasury bonds. Its portfolio primarily consists of swap agreements and other derivative instruments designed to provide inverse leveraged exposure to the ICE U.S. Treasury 20+ Year Bond Index. It may also hold cash and cash equivalents as collateral.

Market Share: TTT has a relatively moderate market share within the leveraged inverse fixed income ETF segment.

Total Net Assets (AUM): 176600000

Key Competitors

• Direxion Daily 20+ Yr Trsy Bear 3X ETF (TMV)
• ProShares Short 20+ Year Treasury (TBF)
• iShares 20+ Year Treasury Bond ETF (TLT)

Competitive Landscape

The leveraged inverse fixed income ETF market is fairly concentrated, with a few key players dominating the landscape. TTT offers high leverage (3x inverse), which is attractive to some traders but riskier. Competitors like TMV offer similar inverse exposure. TBF is a non-leveraged short treasury ETF. TLT provides exposure to long term treasuries.

Historical Performance: Historical performance can vary significantly depending on interest rate movements. Due to its leveraged nature, TTT is prone to significant fluctuations and is not suitable for long-term buy and hold strategies.

Benchmark Comparison: The ETF's performance should be compared to 3x the inverse daily return of the ICE U.S. Treasury 20+ Year Bond Index. Due to compounding, the performance over longer periods can deviate significantly from 3x the inverse of the index's performance.

Expense Ratio: 0.95

Average Trading Volume

TTT exhibits moderate liquidity, with an average daily trading volume suitable for many retail investors, but potentially limiting for very large institutional trades.

Bid-Ask Spread

The bid-ask spread for TTT can fluctuate based on market conditions and trading activity, but is typically manageable for most traders.

Market Environment Factors

TTT is highly sensitive to changes in interest rates and investor sentiment towards long-term Treasury bonds. Rising interest rates generally benefit TTT, while falling rates can lead to significant losses.

Growth Trajectory

TTT's growth is heavily dependent on market conditions and the prevailing interest rate environment. Increased volatility and a rising interest rate environment may increase demand for the product.

Competitive Edge

TTT's competitive advantage lies in its high leverage (3x inverse) offering, which appeals to sophisticated traders seeking to capitalize on short-term declines in long-term Treasury bond prices. ProShares has a reputation for offering a range of leveraged and inverse products, providing a recognized and trusted platform for these types of investment strategies. The fund's daily reset mechanism allows for efficient execution of short-term strategies, making it attractive for active traders. This daily reset helps minimize the effects of compounding, although the fund's performance will still deviate significantly from the inverse of the underlying index over longer periods.

Volatility

TTT exhibits high volatility due to its leveraged nature. It is not suitable for risk-averse investors.

Market Risk

TTT is subject to significant market risk, particularly interest rate risk. Rising Treasury bond prices can lead to substantial losses.

Ideal Investor Profile

The ideal investor for TTT is a sophisticated, active trader with a short-term investment horizon and a high-risk tolerance. Investors should have a strong understanding of leveraged and inverse ETFs and the risks associated with them.

Market Risk

TTT is best suited for active traders seeking to profit from short-term declines in long-term Treasury bond prices. It is not suitable for long-term investors or passive index followers.

ProShares UltraPro Short 20+ Year Treasury (TTT) is a leveraged inverse ETF designed for short-term trading strategies focused on profiting from declines in long-term Treasury bond prices. Its 3x leverage amplifies both potential gains and losses, making it a high-risk investment. The ETF is best suited for sophisticated traders with a deep understanding of market dynamics and a high-risk tolerance, who can actively monitor and manage their positions. It is not appropriate for buy-and-hold investors or those seeking long-term capital appreciation due to the effects of compounding and daily resets.

Data Sources:

• ProShares website
• ETF.com
• Yahoo Finance

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Past performance is not indicative of future results. Leveraged and inverse ETFs are complex investment products and involve significant risks.