ProShares UltraShort 20+ Year Treasury seeks to have the performance of (200%) the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index. However the ETF has not done so.
There are many reasons to short the fund shorting U.S. treasuries and surprisingly none of the analysis is actually based on the price of U.S. treasuries.
(1) The funds market value is updated daily. Currently the fund is overvalued by $2 per share compared to its actual listed price on the Pro Shares website.
(2) The fund should be valued lower than its market value due to the 0.95% fees taken by the administrators.
(3) The fund does not perform correctly, the fund is shorting U.S. treasuries which are up 8% since inception of the fund, yet this ETF is down over 27%. This is caused by compound interest. As U.S. treasuries go up the fund loses value more rapidly, and thus it takes longer to recover. On the flip side the stock should go up more rapidly if the fund start to make money.
(4) Looking at its chart (though we never make investment suggestions based on a chart, a chart is more important for looking at stock with no fundamentals) we can see that TBT is down nearly every month since inception.
While we realize none of these reasons have anything to do with U.S. treasuries, it is important to note that the fund does not seem to track the treasuries; so why bother analyzing the index that it is supposed to track.
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