Levered Bond ETF That’s ‘Broken Many Hearts’ Sees Record Inflow
- Bond ETFs TMF and TLT have seen large inflows in recent weeks
- Some imagine scenario where Fed keeps rates at elevated levels
The inflows come as the Federal Reserve cut rates by a quarter point last week, after an outsize 50 basis-point reduction in September.
Photographer: Ting Shen/BloombergA cohort of ETF traders are piling into a high-octane Treasury bet that interest rates have well and truly peaked. It’s one that’s burned them over the past three years.
A record $625 million flowed into the Direxion Daily 20-Year Treasury Bull 3X (ticker TMF) last week, data compiled by Bloomberg show. The fund uses derivatives to offer three times the Treasury market’s performance and is favored by short-term day traders who tend to be drawn in by volatility. Investors also added more than $1.4 billion into the iShares 20+ Year Treasury Bond ETF (TLT), which followed a $1.6 billion infusion for the fund the week prior.