Last week, ProShares launched the Ultra Short Lehman 7-10 Year Treasury ETF(PST Quote) and the Ultra Short Lehman 20+ Year Treasury ETF(TBT Quote) -- the first ETFs that allow for shorting the bond market.
From a big-picture view, an investor who thought interest rates were going up could capitalize on that belief with either of these funds.
PST or TBT can be integrated into a fixed-income portfolio as a hedge for rates going higher, but, unlike put options, both funds will pay a little interest. If rates do move up, so will the interest paid by the funds. If rates on T-bills go up, PST and TBT will have a larger payout.
(If you are new to the ProShares line of funds, you should know that the word "ultra" in the name means that the funds are leveraged 2 to 1.) ...
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