{"id":85502,"date":"2023-11-16T22:42:20","date_gmt":"2023-11-17T03:42:20","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/popular-tlt-treasury-fund-is-raking-in-20-billion-in-new-assets-despite-frankly-terrible-returns-says-researcher\/"},"modified":"2023-11-16T22:42:22","modified_gmt":"2023-11-17T03:42:22","slug":"popular-tlt-treasury-fund-is-raking-in-20-billion-in-new-assets-despite-frankly-terrible-returns-says-researcher","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=85502","title":{"rendered":"Popular TLT Treasury fund is raking in $20 billion in new assets despite \u2018frankly terrible\u2019 returns, says researcher"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002732906\" role=\"document\">\n<p>\u201cMeme stonks,\u201d meet the \u201cmeme bonk.\u201d Or maybe not.<\/p>\n<p>That\u2019s the Leuthold Group\u2019s Scott Opsal, riffing off the pandemic-era rise in meme-stock trading. But this time he\u2019s referring to the popularity of the downtrodden iShares 20+ Year Treasury Bond ETF<br \/>\n        TLT<span>,<\/span><br \/>\n       a fund attracting mega inflows, despite its stunning losses.<\/p>\n<div class=\"paywall\">\n<p>The index fund has raked in over $20 billion in new assets this year, even while returns have been \u201cfrankly terrible,\u201d he said.  <\/p>\n<p>Opsal estimates the fund as of late October has seen a -48% cumulative return, including income, \u201csince rates bottomed in 2020, an almost unimaginable loss in a security generally perceived as low risk.\u201d<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>He contrasted TLT\u2019s pain with the S&amp;P 500 index\u2019s<br \/>\n        SPX<br \/>\n       nearly 33% gain over the same stretch, a period that coincided with a bear market in stocks and the Federal Reserve\u2019s most aggressive rate-hiking cycle in four decades.<\/p>\n<p>\u201cThe notion of huge investor inflows into a poorly performing asset with hopes of a coming price recovery not only describes meme stonks, but it also reflects recent activity in TLT,\u201d Opsal wrote.<\/p>\n<p>A big caveat is that Treasury securities, unlike meme stocks of companies teetering on collapse, are guaranteed by the U.S. government to fully repay, if held to maturity.<\/p>\n<p>BlackRock oversees TLT and a suite of bond ETFs. In a statement to MarketWatch, a spokesperson said continued flows into TLT reflect investors\u2019 positioning for a possible economic slowdown, as well as anticipation of a more normalized yield curve in the future. <\/p>\n<p>\u201cThe largest holders of TLT are wealth platforms and longer-term asset allocators, as well as investors \u2018barbelling\u2019 their Treasury allocation, pairing both short- and long-duration exposures,\u201d she said. The fund is passively managed and seeks to track results of an benchmark index of Treasury bonds maturing in 20-plus years. <\/p>\n<p>Trouble in the roughly $26 trillion Treasury market began when talk of higher rates began to weigh on bond prices, especially older, low-coupon securities. Loses on these securities are realized if a holder becomes a forced seller at a discounted price, a factor that contributed to the collapse of Silicon Valley Bank in March. <\/p>\n<p>Opsal argued that TLT resembles a meme stock because investors piled in as its net asset value fell from a $161 peak a few years ago to as low as $83 in late October, according to Leuthold. <\/p>\n<p>The fund\u2019s net asset value has since recovered to about $89.72, according to the latest data from FactSet. That coincided with an easing in the 10-year Treasury yield<br \/>\n        BX:TMUBMUSD10Y<br \/>\n       in November, to about 4.5% as of Wednesday from a 16-year peak of 5% last month.<\/p>\n<p>While the 10-year Treasury yield\u2019s climb from a low below 1% in 2020 has trampled many bonds, investors lately have been looking at add duration in fixed income at today\u2019s higher rates.<\/p>\n<p><strong>Read:<\/strong> Why a derailed $11 trillion corporate bond market looks ripe for a comeback as U.S. inflation slows<\/p>\n<p>\u201cThis November bounce will soothe some of the wounds felt so far by providing a reprieve from the losses experienced by the billions of dollars flowing into TLT, deposits which have consistently been underwater for the last two years,\u201d Opsal wrote.<\/p>\n<p>Still, many investor hope the central bank\u2019s policy rates may now be near a peak, especially since the Fed has left it unchanged at a 22-year high of 5.25% to 5.5% since July.<\/p>\n<p>With inflation continuing to ease, there also has been optimism in markets about potential Fed rates cuts, even modest ones, next year. <\/p>\n<p>That backdrop has the S&amp;P 500 index up 17.3% on the year through Wednesday, while the Dow Jones Industrial Average<br \/>\n        DJIA<br \/>\n       was up 5.6% and the Nasdaq Composite Index<br \/>\n        COMP<br \/>\n       was 34.8% higher in 2023, according to FactSet.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/popular-tlt-treasury-fund-is-raking-in-20-billion-in-new-assets-despite-frankly-terrible-returns-says-researcher-764371a1?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cMeme stonks,\u201d meet the \u201cmeme bonk.\u201d Or maybe not. That\u2019s the Leuthold Group\u2019s Scott Opsal, riffing off the pandemic-era rise in meme-stock trading. But this time he\u2019s referring to the popularity of the downtrodden iShares 20+ Year Treasury Bond ETF TLT, a fund attracting mega inflows, despite its stunning losses. The index fund has raked [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":85503,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-85502","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Popular TLT Treasury fund is raking in $20 billion in new assets despite \u2018frankly terrible\u2019 returns, says researcher | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u201cMeme stonks,\u201d meet the \u201cmeme bonk.\u201d Or maybe not. That\u2019s the Leuthold Group\u2019s Scott Opsal, riffing off the pandemic-era rise in meme-stock trading. 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