Now Is The Season To: July 2011

Published on by on July 1, 2011

Consider Floating Rate Bond ETFs

Thanks to the shakiness of stock markets around the world, many investors are piling into bond funds as a way to play a strengthening dollar, capture yield, and ride out the storm. While this might be a good short-term strategy, eventually the Fed will have to raise rates in order to combat inflation. When this happens, bond ETFs that are sensitive to interest rate changes, especially those on the long end of the curve, will be negatively impacted by this and will likely see the capital gains that they have made over the past few months disappear. Thanks to this reality, long-term investors need to consider adding bonds that are tied to floating rates as an alternative.

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FactorShares 2X: Gold Bull/S&P500 Bear (FSG) is a leveraged spread ETF designed for investors who believe gold will increase in value relative to large-cap U.S. equities in one day or less.  FSG seeks to track approximately +200% of the daily return of the S&P Gold – Equity Spread Total Return Index (before fees and expenses) by primarily establishing a leveraged long position in Gold Futures and a leveraged short position in the E-mini S&P 500 Stock Price Index™ Futures.