Any Chance Axelrod Gets to Slight the U.S. Government is a Winner in His Book
by Ben Hernandez | ETF Trends | September 11, 2018
Treasure chests of money tinged with corruption amid a backdrop of high finance makes for an interesting show and with a character like fictitious hedge fund manager Bobby Axelrod, expertly played by actor Damian Lewis, Showtime network’s television series “Billions” takes viewers on a seemingly endless game of chess. Whenever there’s money to be made, rest assured that the ambitious Axelrod is in the eye of the storm regardless of the asset class, including bonds.
In the second season of “Billions,” Axelrod showed that his multi-strategy hedge fund, Axe Capital, is not averse to the fixed-income space. With word that a casino was headed to sleepy town Sandicot, Axelrod snapped up the city’s distressed municipal bonds in an effort to capitalize on its impending rise in prices should the casino plans actually come to fruition.
As it turns out, the plans went awry and Axelrod is forced to try to recoup his municipal bond investment by foreclosing on the town, taking all its assets, including land ownership and buildings. This shows Axelrod’s disdain for losses and the hedge fund billionaire will go to great lengths in an effort to avoid losing money.
The show highlights Axelrod’s continuous cat and mouse game with ruthless U.S. Attorney Chuck Rhoades played by Paul Giamatti. As such, an underlying theme in the following list of fixed-income ETFs that Axelrod may play is the inclusion of a Treasury debt-shorting strategy–any chance Axelrod gets to slight the U.S. government is a winner in his book–as well as his penchant for risk when necessary.
That being said, here are five fixed-income ETFs worthy of inclusion in the Axe Capital debt portfolio.
1. ProShares High Yield—Interest Rate Hdgd (BATS: HYHG)
HYHG tracks the performance of the Citi High Yield (Treasury Rate-Hedged) Index and allocates 80% of its total assets in high-yield bonds and short positions in Treasury Securities in order hedge against rising rates. Because HYHG invests in high-yield bonds, there is credit risk associated with the higher yield since the fund invests in corporate issues that are less than investment-grade, but with a risk aversion like Axelrod’s, that shouldn’t deter him. By targeting a duration of zero, HYHG offers less interest rate sensitivity versus its short-term bond peers.
Read the rest of the original article at ETF Trends