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Josh Ortner
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Joshua Ortner is an investment advisor at Ortner Capital Management. A tactical long/short fixed income advisor to ultra high net worth investors. Josh studied financial management at Kent State University with specializations in active investment management.
My company:
Ortner Capital Management
  • Shorting Treasuries for the Fixed Income Investor  0 comments
    Sep 7, 2010 8:51 PM | about stocks: TBF, TBT, SPY
    Shorting Treasuries for the Fixed Income Investor
                By Joshua A. Ortner
    With bond fund managers seeing record inflows of capital from individuals, what could an individual investor do for equity like returns in the fixed income class that many multi-sector bond fund managers won’t touch? Short selling treasuries using exchange traded funds. ProShares Short 20 + Year Treasuries ETF (NYSEARCA:TBF) and the Ultra Short 20 + Year Treasuries ETF (NYSEARCA:TBT),  give the individual investor a hedge against higher equity returns, inflation risks, and a bond bubble possibility just to name a few. Other advantages could be seen in transparent liqudity in the ETF's themselves, as well as low cost structures vs. a 2+20 fixed income hedge fund manager.
    With the S&P 500 down only 1.62% for the year (NYSEARCA:SPY), 20 + year treasuries (NYSEARCA:TLT) are up a stellar 17.59% for the year, creating an interesting divergence between the two.

    Do you qualify for shorting treasuries?

    1)      Believe treasuries are selling at a premium not seen since the     financial crisis.

    2)      Believe inflation rates will grow faster than 1.65%, as indicated by the difference in to 10-Year Treasury Yield and yields on 10-Year TIPS.

    3)      Believe this treasury rally is overdone with evidence of such by the above chart.

    Disclosure: No positions at the current time
    Stocks: TBF, TBT, SPY
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