Morningstar Magazine - June/July 2018 - 79
KEEP THE BONDS,
LOSE THE DURATION
BOND ETFS FOR RISING RATES
The longer the duration of your bond fund,
the more it will be hurt as rates rise. Even
moving to a short-term bond fund leaves
you exposed to significant interest rate
risk. Consider IGHG and HYHG instead-
investment grade and high yield bond
ETFs with built-in hedges that target a
duration of zero.
PROSHARES INTEREST RATE
HEDGED BOND ETFS
IGHG
Investment Grade-
Interest Rate Hedged
HYHG
High Yield-
Interest Rate Hedged
Visit RisingRatesSolutions.com
Investing involves risk, including the possible loss of principal. These ProShares ETFs entail certain risks, which include the use of
derivatives (futures contracts), imperfect benchmark correlation, leverage and market price variance, all of which can increase volatility and
decrease performance. Bonds will generally decrease in value as interest rates rise. High yield bonds may involve greater levels of credit,
liquidity and valuation risk than higher-rated instruments. Short positions in a security lose value as that security's price increases. Narrowly
focused investments typically exhibit higher volatility. Please see summary and full prospectuses for a more complete description of risks.
There is no guarantee any ProShares ETF will achieve its investment objective.
HYHG and IGHG do not attempt to mitigate factors other than rising Treasury interest rates that impact the price and yield of corporate bonds,
such as changes to the market's perceived underlying credit risk of the corporate entity. HYHG and IGHG seek to hedge high yield bonds
and investment grade bonds, respectively, against the negative impact of rising rates by taking short positions in Treasury futures. The short
positions are not intended to mitigate credit risk or other factors influencing the price of the bonds, which may have a greater impact than
rising or falling interest rates. These positions lose value as Treasury prices increase. Investors may be better off in a long-only high yield or
investment grade investment than investing in HYHG or IGHG when interest rates remain unchanged or fall, as hedging may limit potential gains
or increase losses. No hedge is perfect. Because the duration hedge is reset on a monthly basis, interest rate risk can develop intra-month,
and there is no guarantee the short positions will completely eliminate interest rate risk. Furthermore, while HYHG and IGHG seek to achieve an
effective duration (interest rate sensitivity) of zero, the hedges cannot fully account for changes in the shape of the Treasury interest rate (yield)
curve. HYHG and IGHG may be more volatile than a long-only investment in high yield or investment grade bonds. Performance of HYHG and
IGHG could be particularly poor if high yield or investment grade credit deteriorates at the same time that Treasury interest rates fall. There is
no guarantee the fund will have positive returns.
Carefully consider the investment objectives, risks, charges and expenses of ProShares before
investing. This and other information can be found in summary and full prospectuses. Read them
carefully before investing. Obtain them at ProShares.com. ProShares are distributed by SEI Investments Distribution Co., which is not
affiliated with the funds' advisor. © 2018 PSA AD-2018-416
http://www.RisingRatesSolutions.com
http://www.ProShares.com
Table of Contents for the Digital Edition of Morningstar Magazine - June/July 2018
Contents
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