ProShares launches first two ETFs tied to 10-year breakeven inflation

By Toni Weeks

San Diego, Feb. 9 - ProShares announced it has launched two exchange-traded funds linked to 10-year breakeven inflation, according to a press release.

The ProShares UltraPro 10 Year TIPS/TSY Spread will trade on the NYSE Arca under the symbol "UINF," and the ProShares UltraPro Short 10 Year TIPS/TSY Spread will trade under the symbol "SINF."

UINF seeks to provide, before fees and expenses, three times the daily performance of the Dow Jones Credit Suisse 10-Year Inflation Breakeven Index, while SINF seeks to provide negative three times the daily performance of the same index.

Breakeven inflation, a widely followed measure of inflation expectations, aims to isolate the market's expectation of inflation implied by the difference in yields between Treasury Inflation Protected Securities, or TIPS, and Treasury bonds. The index tracks the returns of a long position in 10-year TIPS and a short position in Treasury bonds.

"Many investors carefully watch 10-year breakeven inflation but have not had access to a liquid and transparent way to act on their views," Michael L. Sapir, chairman and chief executive officer of ProShare Advisors LLC, the ETFs' Bethesda, Md.-based investment adviser, said in the release. "Now, for the first time, investors can try to take advantage of swings in 10-year inflation expectations with an ETF."

The volatility of 10-year breakeven inflation has been relatively low, the release noted. Multiplying the daily movements by 3x or negative 3x over the past five years results in annualized volatility roughly comparable to that of the S&P 500 index.

The launch of the two ETFs follows last month's launch of the first 30-year breakeven inflation ETFs, the ProShares 30 Year TIPS/TSY Spread and the ProShares Short 30 Year TIPS/TSY Spread. These ETFs seek to provide 1x and negative 1x, respectively, the daily performance of the Dow Jones Credit Suisse 30-Year Inflation Breakeven Index before fees and expenses.

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