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ProShares licenses new Dow Jones Credit Suisse 30-Year Inflation Breaksven Index for two new ETFs


ProShares has licensed the new Dow Jones Credit Suisse 30-Year Inflation Breakeven Index to serve as the basis for both the ProShares 30 Year TIPS/TSY Spread ETF and the ProShares Short 30 Year TIPS/TSY Spread ETF.

The ETFs were launched today by ProShares; all of the ProShares ETFs in the series will trade on the NYSE Arca.
The Dow Jones Credit Suisse 30-Year Inflation Breakeven Index was also launched today as was the Dow Jones Credit Suisse 10-Year Inflation Breakeven Index.
The Dow Jones Credit Suisse Inflation Breakeven Indexes, an extension of the Dow Jones Long-Term Inflation Indexes family, is designed to provide investors with tools for tracking the market’s expectations for long-term inflation. The indexes leverage a methodology developed by the Fixed Income Index Products Group in Credit Suisse Group’s New York office.
The new indexes combine some of the most liquid and transparent instruments available in the marketplace: the most recently issued 10- and 30-year Treasury Inflation Protection Securities (TIPS) bonds and the closest maturity 10- and 30-year Treasury (TSY) bonds, respectively. The indexes seek to measure inflation expectations that the market has priced into these Treasury securities by representing a duration-neutral strategy with positions that are long the TIPS bonds and short the Treasuries of the same maturity. This strategy is designed to reflect returns linked to inflation and minimises interest-rate risk.
“The Dow Jones Credit Suisse Inflation Breakeven Indexes are effective tools that aim to describe the market’s changing view on US long-term inflation,” says Michael A Petronella (pictured), President, Dow Jones Indexes. “The indexes provide a reference point for investors seeking to understand market expectations for future inflation levels.”
ProShares selection of the Dow Jones Credit Suisse 30-Year Inflation Breakeven Index and the Dow Jones Credit Suisse 10-Year Inflation Breakeven Index as the underlying gauges for its new ETFs is the latest in a series of licensing arrangements between ProShares and Dow Jones Indexes. In all, 17 Dow Jones Indexes’ gauges are now used as a basis for 43 ProShares ETFs, including 11 that were announced in February 2007 and two in June 2006.
“The new indexes have certain advantages over other inflation-related indexes,” says Petronella. “For example, TIPS indexes are highly sensitive to interest-rate movements. By incorporating a bond component, the index’s sensitivity to interest-rate fluctuations is intended to be mitigated. And, with inflation at historic lows, increasing global demand for commodities and low-interest rates, the climate seems right for inflation index products.”
Both the Dow Jones Credit Suisse 30-Year Inflation Breakeven Index and The Dow Jones Credit Suisse 10-Year Inflation Breakeven Index are rules-based and transparent.

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