From the March 2012 issue of Research Magazine • Subscribe!

February 24, 2012

Inflation ETFs Unveiled

ProShares launched the ProShares 30 Year TIPS/TSY Spread (RINF) and the ProShares Short 30 Year TIPS/TSY Spread (FINF). Both ETFs are designed to provide exposure to breakeven inflation, a measure of inflation expectations.

RINF seeks to match the performance of the Dow Jones Credit Suisse 30-Year Inflation Breakeven Index, before fees and expenses. FINF aims for inverse of the daily performance of the Dow Jones Credit Suisse 30-Year Inflation Breakeven Index, before fees and expenses.

Breakeven inflation aims to isolate the market’s expectation of inflation implied by the difference in yields between Treasury Inflation Protected Security (TIPS) and Treasury bonds. The Dow Jones Credit Suisse 30-Year Inflation Breakeven Index tracks the returns of a long position in 30-year TIPS and a short position in Treasury bonds.

“Many investors are focused on inflation and closely follow breakeven inflation, a common yardstick for inflation expectations,” said Michael L. Sapir, chairman and CEO of ProShare Advisors, ProShares’ investment advisor. “We are pleased to offer investors the first ETFs linked to this important economic indicator.”

Both ProShares ETFs charge annual expenses of 0.75%.

In related news, the ProShares German Sovereign/Sub-Sovereign ETF (GGOV) made its trading debut in January and became the first U.S.-listed ETF focused on sovereign and sub-sovereign debt from Germany.

GGOV is linked to the performance of the Markit iBoxx EUR Germany Sovereign & Sub-Sovereign Liquid Index and the fund’s annual expense ratio is 0.45 percent. Germany has the world’s third-largest public debt market.

The fund’s underlying benchmark tracks the returns of euro-denominated general obligation bonds issued by the Federal Republic of Germany, German state governments and entities owned or guaranteed by German government agencies. •

 

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