ETF Spotlight: Inverse ETFs
Last updated: 17 Jul, 2020 | 09:22 am
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