Thread by @choffstein

1/ Interesting new ETF from @SimplifyETFs got seeded today.

$TYA – 
Simplify Risk Parity Treasury ETF

Ignore the name; it should basically be 2.5x 10-year U.S. Treasury futures.

I see two immediate uses.

simplify.us/etfs/tya-simpl…

@SimplifyETFs 2/ The first is an outright replacement from long-dated Treasury exposure (e.g. $TLT or $ZROZ).

You should get approximately the same duration, but harvest a much more attractive roll yield over time by sitting in the belly of the curve.

@SimplifyETFs 3/ The second is capital efficiency.

Replace a 10% position in intermediate-term U.S. Treasuries (e.g. $IEF or $VGIT) and replace it with 4% of $TYA.

You get the same net exposure, but now you can enjoy the newfound flexibility of liquidity of your freed up capital (6%).

@SimplifyETFs 4/ I also wonder if a tool like this is useful to small pensions who want to hedge their liabilities but don’t want to run a futures program.

Instead of liability matching with bonds, they can use a smaller allocation to this ETF and free up capital for risky asset exposure.

@SimplifyETFs cc @EconomPic Not quite $NTSX, but seems like it opens up a lot of room for capital efficiency