ETF Spotlight: Inverse ETFs

Last updated: 17 Jul, 2020 | 09:22 am

ETF Spotlight: Inverse ETFs

What are inverse ETFs?

  • An inverse ETF is an exchange traded fund (ETF) that profits from decline in the value of a benchmark index or the market.
  • These ETFs allow investors to hedge their portfolio or profit when the markets are on a down trend.
  • They are constructed using various derivatives allowing to profit from a decline in the underlying benchmark.

ProShares Short S&P 500 (SH)

  • SH is a short ETF that seeks a return equal to -1x the return of benchmark S&P 500.
  • This fund carries an expense ratio of 0.89% with an AUM of $3.31 Billion.

Performance of SH during virus led panic sell-off

ProShares UltraPro Short S&P 500 (SPXU)

  • SPXU is a short ETF that seeks a return equal to -3x the return of benchmark S&P 500.
  • This fund carries an expense ratio of 0.91% with an AUM of $1.1 Billion.

Performance of SPXU during virus led panic sell-off

Inverse ETFs vs Short selling

  • Inverse ETFs allows investors to hedge their portfolios without having to sell anything short
  • No margin account required
  • Availability of multiple inverse ETFs for many major market indices

How to invest in these ETFs?

  • Create your free US Stocks Account
  • Transfer funds to your US Stocks Account from your bank
  • Buy and Sell right on the IND SuperMoneyApp

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