Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Inverse bond funds - why the dismal performance?
Old 02-08-2005, 05:31 AM   #1
Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Houston
Posts: 1,448
Inverse bond funds - why the dismal performance?

Given all the talk I've heard in the last year about the "rising interest rate environment," I thought that inverse bond funds (which rise in value as interest rates rise, unlike bond funds) would be hot stuff. But instead, we've seen gains in ST/intermediate bond funds and the inverse funds have sucked it up. A few examples:

RRPIX ProFunds Rising Rates Opportunity Investor
RYJUX Rydex Juno Investor
PCDBX Potomac Contrabond Fund Inv

The chart trends on all of these are down, down, down. What gives? Is it because the Fed raised ST interest rates but LT rates haven't risen as expected and the yield curve has flattened? If LT rates ever start rising, I would expect these funds to show some gains, is that correct? Is there even any point to holding these funds, or would it be simplier/cheaper to simply short some LT bond ETFs as Brewer suggested in another thread?

Also, I wonder if JG could use one of these funds to help offset his LT bond exposure?
soupcxan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Inverse bond funds - why the dismal performanc
Old 02-08-2005, 06:03 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
Re: Inverse bond funds - why the dismal performanc

I used RYJUX the last time I shorted the bond market. It creates a synthetic short on the 30 year treasury via futures. It would have done poorly lately because the long end of the curve has been dropping, thereby pushing up the value of the 30 year treasury. Since RYJUX is short the 30 year treasury, it lost as the bond rose. Simple as that.
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Bond holdings - thoughts on switching funds? Lusitan FIRE and Money 6 04-04-2007 11:39 AM
Global bond funds LOL! FIRE and Money 10 02-27-2007 04:23 PM
My 401k's expense ratios, Bogle, lowest-cost quartile data for stock funds? Dude FIRE and Money 19 02-07-2007 02:17 PM
taxable versus tax-exempt bond funds JohnEyles FIRE and Money 3 10-28-2006 01:32 PM
Bond funds now? Roger_R FIRE and Money 2 06-02-2004 10:20 AM

» Quick Links

All times are GMT -6. The time now is 04:53 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.