Vanguard's Extended Duration ETF (EDV)

[HenryTo]

For those that would like a little bit more "leverage" than your typical long-dated bond ETF. I believe the effective duration on this fund is currently about 24, versus about 10 to 11 for your typical long bond ETF.
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American Stock Exchange Lists Vanguard Extended Duration Treasury ETF
Monday December 10, 11:46 am ET
New ETF Follows Movement of Zero-Coupon U.S. Treasury Securities

NEW YORK, Dec. 10 /PRNewswire/ -- The American Stock Exchange® (Amex®) today announced that it has launched trading in the Vanguard Extended Duration Treasury ETF (Amex: EDV - News). With the addition of this new fund, Vanguard now offers investors 34 ETFs, all of which are listed on the Amex.

EDV is designed to track the performance of the Lehman Brothers Treasury STRIPS 20-30 Year Equal Par Bond Index which includes zero-coupon U.S. Treasury securities (Treasury STRIPS) with maturities ranging from 20 to 30 years. A Treasury STRIP represents a single coupon payment, or a single principal payment, from a U.S. Treasury security that has been "stripped" into separately tradable components.

"Amex is proud to support Vanguard, a recognized leader in the ETF space, as they continue to add to their family of fixed income ETFs," said Scott Ebner, Senior Vice President of the Amex ETF Marketplace. "EDV is the first ETF to provide investors with exposure to a portfolio of long duration zero- coupon Treasury STRIPS."

Kellogg Capital Group, LLC is the specialist for EDV. Susquehanna Investment Group will trade options on the product.

[nodoodahs]

BTW, TLO is about 17 years eff. duration, which I don't find different enought from TLT's about 14 years for me to think about adding it. Since the EDV is trading, I sent a request to StockCharts.com for them to add it to their data stream - and I will be adding it to my watch list as well.

It'll be interesting to see if this thing can attract enough liquidity in the next six months or so to be worth keeping tabs on from an intermediate-term trading perspective. Even without a lot of liquidity, if one's timeframe is long enough, it may be worth a flier.
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[nodoodahs]

Well, you got me curious!

Supposedly the eff.dur. on the index that TLT tracks is 13.91, so they're following their mandate, it's just not as long as some would like, I guess.
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[HenryTo]

Thanks Bill, for checking. Note that this Vanguard fund is not for the faint-hearted. They deliberately did not create a retail version of the mutual fund, given its volatility and high sensitivity to the 20 and 30 year Treasury rates. Minimums for the mutual fund versions is $1 million, but of course, they were kind enough to create an ETF designed specifically for hedge funds and traders.

[nodoodahs]

Effective duration on TLT is 13.81.
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.