The Silent Risk In Portfolios: Long-Duration Exposure

Valuation Rewind199 FollowersFollow5ShareSavePlay(9min)CommentsSummaryLong-duration US Treasury products like TLT and IEF are rated STRONG SELL due to high deficits, refinancing needs, and persistent inflation risks.We recommend HOLD on short-end products like SHY, as their low duration limits portfolio downside despite potential for further short-term yield spikes.Ultra-short duration products such as SGOV are a BUY, offering positive carry, minimal price volatility, and flexibility amid rising yields.Key risks to this bearish duration thesis include significant fiscal tightening or aggressive Fed intervention, both of which could lower long-term yields. Amy Sparwasser/iStock via Getty Images Thesis US Treasuries have always been seen as a safe haven from financial shocks. However, since the COVID crisis, high deficits and unfavorable maturity structure of Treasuries have pushed inflation expectations and yield on all parts ofThis article was written byValuation Rewind199 FollowersFollowI started my career in asset management one year before the GFC. Since then, I have accumulated knowledge and extensive experience in financial analysis and portfolio management of equity, government bond, corporate bond, and money market funds. Fascinated by psychology and the way we make investment decisions. Passionate about sharing my knowledge. Please note that due to my financial institution's compliance requirements, I mainly do not invest in any kind of single stocks but only ETFs.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.