Invesco PowerShares Capital Management and Deutsche Bank have launched two exchange-traded notes linked to CBOT Ultra T-Bond futures.
The ETNs are traded on the NYSE Arca and are listed as the PowerShares DB 3x Long 25+ Year Treasury Bond ETN and the PowerShares DB 3x Short 25+ Year Treasury Bond ETN.
They are the first exchange-traded products to provide investors with a cost effective and convenient way to take a leveraged long or leveraged short view on the performance of ultra bond futures.
The ETNs are senior unsecured obligations issued by Deutsche Bank, London branch, linked to the month-over-month performance of a total return version of the DB Long US Treasury Bond Futures Index or the DB Short US Treasury Bond Futures Index.
The DB Long US Treasury Bond Futures Index measures the performance of a long investment in ultra bonds futures and the DB Short US Treasury Bond Futures Index measures the performance of a short investment in ultra bond futures.
“We are pleased to bring our successful monthly leverage rebalancing methodology to fixed-income products, and to offer investors a simple way to take a long or short view on ultra bond futures for the first time,” says Martin Kremenstein, director in global markets structuring.
The underlying assets of ultra bond futures are Treasury bonds with at least 25 years remaining term to maturity. The returns of each ETN are obtained by combining three times the returns of the relevant index with the returns of the T-Bill index, less investor fees. Investors can buy and sell the ETNs on the NYSE Arca exchange or receive a cash payment at the scheduled maturity or early redemption based on the performance of the index less investor fees.