Market Index Inverse ETF Funds
Investors now have the opportunity to short the US major stock market indices through Inverse Market Index ETFs. These major market indices include the S&P 500, Nasdaq 100, and the Russell 2000. Investors are able to profit when these major indices decline in price and vice versa when these markets increase. This type of investment is for investors who expect a market decline or correction and are hedging their current portfolio.
Leveraged Market Index Inverse ETFs are also available for investors wanting more risk. Investors can purchase both 2x (200%) and 3x (300%) the market index performance. Owning a leveraged ETF can lead to much higher gains, since an investor is using less capital in return for a possible higher rate of return on investment. There is also a possibility of greater losses due to the leverage factor.
Leveraged Inverse Market Index ETF Example:
Investor A purchased an inverse market ETF and the market declines by 5% after one month. Investor A has just received a positive rate of return of 5% for the month.
Investor B purchased a 2x leveraged ETF of the same market index and the market declined 5% after one month. Investor B has just received a positive rate of return of 10% (5% original rate of return x 2 leverage factor = 10% rate of return).
The following are all available Market Index Inverse ETFs:
Inverse S&P 500 Index ETF
Proshares Short S&P 500 (SH)
Proshares Ultrashort S&P 500 (SDS) - 200% of the Inverse
Proshares UltraPro Short S&P 500 (SPXU) - 300% of the Inverse
Inverse Nasdaq ETF
Proshares Short QQQ (PSQ)
Proshares Ultrashort QQQ (QID) - 200% of the Inverse
Proshares UltraPro Short QQQ (SQQQ) - 300% of the Inverse
Inverse Russell 2000 ETF
Proshares Short Russell 2000 - RWM
Proshares Ultrashort Russell 2000 (TWM) - 200% of the Inverse
Proshares UltraPro Russell 2000 (SRTY) - 300% of the Inverse