Stocks fell as Treasury yields rose across the board this morning after the Bureau of Labor and Statistics reported better than expected hiring results for May. Nonfarm payrolls added 390,000 jobs last month, where economists were expecting 328,000. The benchmark 10-year Treasury yield climbed above 2.97% on concerns that the upbeat jobs report would fuel Fed aggressiveness in its fight against inflation.
Today we’re focusing on an equity strategy that’s designed to succeed along with rising Treasury yield rates. If you want to do more than just defend your precious long-term returns, consider playing offense using this technique.
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 most significant portion of the fund’s holdings. Currently, the fund’s top holdings are Charles Schwab Corp (SCHW), Bank of America (BAC), and PNC Financial Services Group Inc (PNC).
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 most extensive 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 can complement traditional large-cap equity investments.
ProShares Equities for Rising Rates (EQRR)
- Weighted Average Market Cap $66.52B
- Price / Earnings Ratio 16.98
- Price / Book Ratio 2.24
- YTD Return 7.16%
- Yield 1.51%
- Expense Ratio 0.35%
- Net Assets $101.36M
- Number of Holdings 50
Where to invest $1,000 right now...
Before you consider buying EQRR, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not EQRR.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
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...
