This is an inverse leveraged ETF designed to track twice the opposite of the daily return of a US ultra-long Treasury index. It uses derivatives to reflect short-term declines in ultra-long Treasury prices at an amplified magnitude, and its exposure is reset on a daily basis.

It is suited to active traders who want to make a leveraged bet on falling ultra-long Treasury prices as interest rates rise, and who are willing to accept very high risk.

It is a passive (index-tracking) ETF managed by ProShares.

The fund builds its exposure with derivatives to track twice the opposite of the daily return of a US ultra-long Treasury index, and it resets that exposure every day. It profits when interest rates rise and ultra-long Treasury prices fall, but because of the daily reset, cumulative returns in volatile markets can differ substantially from simply twice the inverse of the index.

• Tracks twice the opposite of the daily return of ultra-long Treasuries
• An inverse leveraged product that bets on rising interest rates

Assets under management (AUM) stand at $269.3M, and the total expense ratio is 0.93% per year.

Compared with TLT, which holds ultra-long Treasuries outright, the main points of comparison are direction, leverage multiple and the daily reset.

Inverse leveraged ultra-long Treasury products typically post large gains when interest rates rise and Treasury prices fall, and large losses when interest rates fall. Because of the daily reset, cumulative performance can erode in markets where rates move sideways with sharp swings.

Fund flows into inverse leveraged bond products vary widely with interest rate outlooks and short-term speculative demand, and short-term trading and hedging money sometimes flows in when expectations of rising rates build. It is also worth noting that performance can differ greatly depending on the direction of interest rates and the volatility environment.

Betting on rising rates and hedging bond holdings are both its strengths and its risks, while the compounding effect of the daily reset, amplified losses when rates fall, and unsuitability for long-term holding are key considerations.

To hold ultra-long Treasuries outright, direct substitutes include TLT, while for a leveraged bet on falling interest rates, products such as TMF, a triple-leveraged ultra-long Treasury product, are also worth comparing. To reduce interest rate risk with short-term Treasuries, products such as SHV can be considered as well. The three products shown in the table, TMV, TBF and TTT, differ in leverage multiple, offering 3x and 1x inverse exposure to ultra-long Treasuries. What sets this ETF apart is its inverse leveraged structure that tracks twice the opposite of the daily return of ultra-long Treasuries.

Here are the points to review before investing in TBT. The bet on rising rates and the hedging use are attractive, but amplified losses when rates fall, the compounding effect and unsuitability for long-term holding need to be confirmed in advance. It is best to approach it only after fully understanding the inverse leveraged structure.

Amplified losses when falling rates lift ultra-long Treasury prices and the compounding effect of the daily reset are the main variables for performance, and in markets where rates move sideways with sharp swings, cumulative performance can erode. Inverse leveraged products are unsuitable for long-term holding and carry a high risk of principal loss.

It is a candidate suited to risk-tolerant traders who want to make a leveraged bet on falling ultra-long Treasuries as interest rates rise, or who want a short-term hedge. To hold ultra-long Treasuries outright, a product such as TLT fits better, and if you want to bet on rising rates, it is advisable to choose this product only after fully understanding its structure.