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July, 8, 2016
Current price $7.75, index value: 2.15%.
1. Business
(1)This is a treasury rate double short of us 30 year treasure yield ETF in CAD$. MER is around 1.15%. Since its inception at 2008 it has lost 65% compare the loss of 50% of the index.
2. Thoughts
(1) The treasure rate is currently in all time low at close to 2%. In 1980s, the treasury is close to 10% which was a high interest rate and high inflation period. Since 1990 to 2010, the rate is down from 8% to 4%, roughly lost 1 percent in every 5 years period. Then from 2010 to now it lost around another 2%.
(2) Although the US keep deferring the rate hike, I don't think the low rate will last for a long time. As Francis Chou has said, he is asking the same question again when he asked at 1980s: "How long the low(high) rate will last".
(3) The major reason for recent down is because of the Brexit. But I think it is an over reaction.
(4) I believe a normal 30 rate should be at least 3% which is also a normal rate of inflation.
3. Risk
(1) The treasure rate can go even lower to maybe just 1%.
(2) The fund might got shut down because the asset base is just a few million.
4.Links
