Data and analyst assessments indicate that billionaire Ken Fisher's eponymous investment firm appears to be making a contrarian wager on the appreciation of the longest-duration US Treasuries, seeking to capitalize on yield levels not seen in nearly two decades.
Earlier this month, Fisher Investments emerged as the primary force behind a record $4 billion influx into a BlackRock exchange-traded fund (ETF) focused on US government bonds with maturities of 20 years or more. Concurrently, another BlackRock fund with a shorter average duration experienced a comparable outflow, suggesting a strategic shift of capital towards the far end of the yield curve.
A representative for Fisher Investments declined to comment on specific securities, citing fiduciary responsibilities to clients, while a BlackRock spokesperson also declined to comment. Todd Sohn, chief ETF strategist at Baird's Strategas, remarked that the fund flows suggest a model-driven increase in duration, noting that no other entity could have moved these funds on such a scale.
Ken Fisher has built his firm over decades through outspoken investment commentary and extensive marketing efforts spanning direct mail, television, books, and digital platforms. This powerful marketing engine has helped expand the firm's assets under management to $441 billion, and Fisher's personal fortune is estimated to exceed $12 billion.
Recent flow data points to the Plano, Texas-based firm because filings as of the end of June showed it holding approximately $15 billion in shares of the iShares 7-10 Year Treasury Bond ETF, which trades under the ticker IEF. This position made Fisher Investments the fund's largest holder and the only institution capable of driving a $4 billion outflow, according to the data.
Of course, this transaction represents only a small fraction of Fisher's overall portfolio, as the majority of its managed assets come from its private client business serving individuals and families. ETF flows do not necessarily reflect the firm's total positioning, as there could be offsetting trades elsewhere. However, recent commentary from Fisher Investments suggests the firm views long-dated bonds as an attractive investment opportunity at current levels.
In an August 12 article titled "Why US Treasuries Are Not in Trouble," the firm's investment editorial team argued that this year's inflation uptick is not broad-based but rather stems primarily from an energy price surge triggered by the war in Iran. The article stated that interest rates may be at the upper end of a multi-year range seen since 2022, but this is largely due to war-related and misplaced inflation concerns. The team noted that inflation expectations are a critical factor influencing long-term rates, and therefore they do not anticipate hotter inflation or significantly higher interest rates.
According to regulatory filings, Fisher Investments has historically maintained only a minimal allocation to the iShares 20+ Year Treasury Bond ETF, which trades under the ticker TLT. This fund, sometimes referred to by industry insiders as the "widowmaker," has been a popular vehicle for investors attempting to buy the dip in long-dated Treasuries, though many bargain hunters have suffered losses as yields have continued to climb.
Shifting capital from IEF to TLT represents a significant increase in duration risk, which measures a fixed-income portfolio's sensitivity to interest rate changes. Simply put, if yields fall, TLT should appreciate more substantially, but if yields continue to rise, its decline would also be more pronounced. Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, described this as a high-risk, high-reward trade, noting that if the bet pays off, the returns could be considerable, while other investors are opting for the short end of the yield curve to capture yields with lower risk exposure.