Investors are actively engaging in what's known as the "Widow Maker" trade, pouring $1.8 billion into BlackRock Inc.'s iShares 20+ Year Treasury Bond ETF (ticker TLT) over the past week. This influx of capital makes TLT the most invested-in ETF among the 630 tracked by Bloomberg. This surge in investment occurred amidst a sell-off in longer-maturity government bonds, driven by anxieties surrounding America's escalating debt.
Despite the perceived risk associated with the "Widow Maker" trade, which historically refers to betting on rising long-term yields, some dip buyers are seeing fast gains. Long-dated Treasury debt, specifically, is providing a rare profitable opportunity for these investors.
However, this activity in long-dated bonds contrasts with trends in other BlackRock bond ETFs. Investors have pulled $3.2 billion from both the iBoxx USD High Yield Corporate Bond ETF and another 20+ Year Treasury Bond ETF this year. Meanwhile, BlackRock’s iShares 0-3 Month Treasury Bond ETF has attracted almost $30 billion this year, boosting its assets to $99 billion, reflecting investor preference for short-term, less risky assets amid rising interest rates and inflation concerns.
