Stocks were flat to start the final trading session of the week. All three major benchmarks are on track to close the week lower. So far, the S&P 500 is down 1.4% for the week while the Dow is down 1.75% and the Nasdaq is 1.9% lower for the same time period. Investors bought bonds and sold equities and commodities this week on fears that the Fed will begin pulling back stimulus sooner than expected.
The tapering of the central bank’s $120 billion per month emergency bond-buying program will initiate a process that will inevitably eventually lead to rising interest rates. While a rate hike may still be on the distant horizon, it wouldn’t hurt to prepare by considering which investments will benefit when rates do eventually rise.
Our trade alert for today highlights a set it and forget it way to help you get ahead of what’s coming. The investment also makes an excellent complement to traditional large-cap equity investments. Read on to learn more.
The ProShares Equities for Rising Rates ETF (EQRR) is the first equity ETF specifically designed to outperform traditional U.S. large-cap indexes during periods of rising interest rates. It targets sectors that have had the highest correlations to 10-year U.S. Treasury yields, and within those sectors, the stocks that have had a strong tendency to outperform as rates rise. Stocks from the Financials and Basic Materials sectors account for the largest portion of the fund’s holdings. Currently, the fund’s top holdings are State Street Corp. (STT), Raymond James Financial (RJF), and JPMorgan (JPM).
EQRR tracks the performance of the Nasdaq Large Cap Equities for Rising Rates Index. The fund’s goal is to provide relative outperformance, as compared to traditional U.S. large-cap indexes, such as the S&P 500, during periods of rising U.S. Treasury interest rates.
The index takes the 500 largest listed U.S. stocks and selects the five U.S. large-cap sectors that have demonstrated the highest correlation to weekly changes in 10-Year U.S. Treasury yields over the last three years. The index then identifies the top ten stocks in each sector that have the highest correlation of relative performance – compared with 500 of the largest listed U.S. stocks – to changes in the 10-year yields. The process is repeated quarterly to maintain a portfolio of 50 stocks. EQRR serves well as a protective measure when rates rise and also can be used to complement traditional large-cap equity investments.
ProShares Equities for Rising Rates (EQRR)
- Weighted Average Market Cap $76.71B
- Price / Earnings Ratio 20.06
- Price / Book Ratio 2.3
- YTD Daily Total Return 29.25%
- Yield 1.51%
- Expense Ratio 0.35%
- Net Assets 7.85M
- Number of Holdings 50
Where to invest $1,000 right now...
Before you consider buying EQRR, you'll want to see this.
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And it's not EQRR.
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Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
Click here to watch his presentation, and decide for yourself...
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
Click here to find out the name and ticker of Keith's #1 pick...
