# What etfs most closely track bond yield?

**URL:** <https://boards.straightdope.com/t/what-etfs-most-closely-track-bond-yield/683441>\
**Category:** Factual Questions\
**Created:** [March 11, 2014, 3:19pm UTC](https://boards.straightdope.com/t/what-etfs-most-closely-track-bond-yield/683441 "2014-03-11T15:19:14Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![ThisUsernameIsForbidden](https://avatars.discourse-cdn.com/v4/letter/t/b4bc9f/32.png) [@ThisUsernameIsForbidden](https://boards.straightdope.com/u/ThisUsernameIsForbidden)\
**Post date:** [March 11, 2014, 3:19pm UTC](https://boards.straightdope.com/t/what-etfs-most-closely-track-bond-yield/683441/1 "2014-03-11T15:19:14Z")

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In the never-ending quest for profitable investments, my prediction is that bond yield will rise as the fed scales back bond purchases. What etfs do you think will most closely track the anticipated rise in bond yield?

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**Author:** ![jbaker](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jbaker](https://boards.straightdope.com/u/jbaker)\
**Post date:** [March 11, 2014, 9:01pm UTC](https://boards.straightdope.com/t/what-etfs-most-closely-track-bond-yield/683441/2 "2014-03-11T21:01:41Z")

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Bear in mind that if an ETF will track a rise in bond yield, that’s probably because it’s invested in bonds. And if yields go up, the value of bonds goes down.

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**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\
**Post date:** [March 11, 2014, 9:13pm UTC](https://boards.straightdope.com/t/what-etfs-most-closely-track-bond-yield/683441/3 "2014-03-11T21:13:43Z")

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If you’re certain bonds yields will go up and you want to make money off of it you’d probably want an ETF that shorts bonds, or an “inverse bond ETF.”

There’s an inverse relationship between the market value of a bond and the current interest rate. As current rates increase a bond with a coupon payment set in a time of lower rates will itself lose value in the market and vice versa (if you followed bonds at all when interest rates started falling a few years ago you noticed various bond and bond-type instruments with previously ‘modest’ yields of 4-6% were trading at a significant premium to face value.)

If you’re wanting capital appreciation based on the future increase in interest rates then basically some fund that is short a bond index or metric (20 Year Treasury rate for instance) would bet he way to go.

If you’re wanting an investment whose yield itself tracks increasing rates the only thing that would do that is a short term bond fund, as its yield will never get too far away from the current yield, but short term bond funds have very modest capital appreciation and they typically don’t trade at much of a premium or discount to NAV.

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**Author:** ![ThisUsernameIsForbidden](https://avatars.discourse-cdn.com/v4/letter/t/b4bc9f/32.png) [@ThisUsernameIsForbidden](https://boards.straightdope.com/u/ThisUsernameIsForbidden)\
**Post date:** [March 11, 2014, 9:15pm UTC](https://boards.straightdope.com/t/what-etfs-most-closely-track-bond-yield/683441/4 "2014-03-11T21:15:31Z")

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Yes, I found a list

> **[What You Need to Ask About Bond ETFs](https://www.thebalancemoney.com/welcome-to-the-world-of-bond-etfs-1215224)**
>
> Bond ETFs seek to emulate a correlating bond index and consist of only the largest and most liquid bonds in the underlying bond index.