FLAT tracks the changes in the yield curve, effectively betting that yields on long 10-year Treasury bonds will fall, and that 2-year Treasury yields will rise. As the curve has started to flatten this year, the ETF has returned 7 percent.
Potential investors in FLAT should be aware of a few issues. First, it's an ETN, not an ETF. ETNs are unsecured debt obligations from a bank or other financial institution, which promise to match the performance of a certain index over a specified period. So investors take on the credit risk of the bond's issuer. Second, it's tiny, with only $4 million in assets. FLAT charges investors 0.75 percent per year.