8 Ways to Play US Treasuries With ETFs

With the current market environment US Treasuries have come heavily into favor as the one secure investment for the future. Even with yields at effectively 0.0% there has not yet been a slowdown in demand for these bonds.

Bullish investors believe more upside is yet to be seen while Bears feel a bubble is preparing to burst. How do investors play the trend? By buying ETFs.

The following ETFs track the long performance corresponding the appropriate Lehman Brothers Treasury Index.

  1. Ishares Barclays Lehman 20+ Year Treasuries (TLT)
  2. Ishares Barclays Lehman 10-20 Year Treasuries (TLH)
  3. Ishares Barclays Lehman 7-10 Year Treasuries (IEF)
  4. Ishares Barclays Lehman 3-7 Year Treasuries (IEI)
  5. Ishares Barclays Lehman 1-3 Year Treasuries (SHY)

And for those who are betting that the bonds bubble will eventually burst here are some investment ideas on the short side (note “ultra” denotes a 2x inverse effect).

  1. Ishares Barclays UltraShort Lehman 20+ Year Treasuries (TBT)
  2. Ishares Barclays UltraShort Lehman 7-10 Year Treasuries (PST)
  3. IShares Barclays Lehman Short Treasuries (SHV)

There have been two recent posts on the blog that predict the next big bubble is in Treasury bonds (see 5 Big Market Predictions For 2009 and Is the Next Bubble Really in Bonds?). While I agree that there is a bubble forming it is very difficult to predict when it will actually burst. The biggest price runups occur just before the start of a collapse so timing is critical.

Regardless of any investor sentiment, there are opportunities to play both sides of the table utilizing the above ETFs.

For more ETF ideas, consider the following posts:

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