1 Jun, 2021

New ETF bets on interest rate rise

Inflation continues to be on the mind of investors and they’re shifting their strategies to mitigate any drastic change. There is also a looming mistrust of Fed policy with regard to interest rates.

Simplify Asset Management recently launched theĀ Interest Rate Hedge ETF, which will seek to take advantage of what its backers see as a titanic shift in markets and is designed specifically to gain from rising longer-term Treasury yields.

The ETF, run by Harley Bassman, a former Merrill Lynch trader who developed a widely followed measure of bond-market volatility known as the MOVE index, will put half its cash in intermediate Treasurys and half in seven-year options referencing a 20-year interest rate of 4.25%. Those options should appreciate as long-term interest rates rise.

Wall Street Journal
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