Comparison of TMV, TMF or EDV as a hedge

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Comparison of TMV, TMF or EDV as a hedge 2017-03-03T15:27:19+00:00
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  • Frank Grossmann
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    Post count: 157

    TMF is by far not so good as TMV short. Here is the 12 month comparison. While all treasuries had quite big losses of about -7%, a shortTMV position was flat over the year. I think for IRA accounts the better and saver way would be a part of the investment in the Bond rotation. This one should make 10-15% per year and is also a hedge.

    Below chart:
    EDV -7.2%
    TMF -18.2% (divide by 2 because TMF=2xEDV) -9.1%
    TMV 0.6% /2 = 0.3% = -0.3% because you are short TMV

    Conclusion: If you can short, then use TMV as a hedge. If not, then better do not hedge or use the Bond Rotation Strategy as a hedge.

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