“Global economic worries and a decline in consumer confidence weighed heavily on the equity markets on Tuesday, and exposure to reverse ETFs paid off. Investors who track the Leveraged ETFs Index are familiar with a number of 1x, 2x, and 3x leveraged reverse ETFs that profit as respective sectors or benchmarks pull back. Today, select funds are ahead by as much as 10% as the Dow tumbles by more than -200 points,” Indie Research Reports.
They go on to say, “The day’s top performers include the Emerging Markets Bear 3X Shares (NYSE:EDZ), Developed Markets Bear 3X Shares (NYSE:DPK), and Technology Bear 3X Shares (NYSE:TYP), all of which are soaring by over 9% for the session. Investors should note that while highly leveraged bets pay off big when accurate, they fall just as fast in the event of a rebound, so 3x ETFs are recommended for experienced day-traders only.”
“Just last week we noted the UltraShort Dow30 ProShares (NYSE:DXD), UltraShort S&P500 ProShares (NYSE:SDS), and UltraShort QQQ ProShares (NYSE:QID) as exchange-traded options for long-only investors to protect positions without the need for a margin account. Each is designed to track twice the inverse of its underlying benchmark, which can be a great way to isolate individual stock picks, or protect against losses without racking up multiple trade commissions. All three are ahead by more than 4%,” Indie Research Reports.
We have put together some more details on the inverse ETFs mentioned in the article below. Be sure to check out further commentary on each ETF at our category section for each respective ETF.
Emerging Markets Bear 3X Shares (NYSE:EDZ) Visit Our EDZ Category: HERE
The investment seeks to replicate, net of expenses, 300% of the inverse daily performance of the MSCI Emerging Markets Index. The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.
Developed Markets Bear 3X Shares (NYSE:DPK) Visit Our DPK Category: HERE
The investment seeks to replicate, net of expenses, 300% of the inverse daily performance of the MSCI EAFE Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.
Technology Bear 3X Shares (NYSE:TYP) Visit Our TYP Category: HERE
The investment seeks to replicate, net of expenses, 300% of the inverse daily performance of the Russell 1000 Technology Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.
UltraShort Dow30 ProShares (NYSE:DXD) Visit Our DXD Category: HERE
The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Dow Jones Industrial Average index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified.
UltraShort S&P500 ProShares (NYSE:SDS) Visit Our SDS Category: HERE
The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the S&P 500 index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified.
UltraShort QQQ ProShares (NYSE:QID) Visit Our QID Category: HERE
The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the NASDAQ-100 index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified.