List of Inverse (short) ETF Funds and Research Reports
Last Updated by WikiWealth
Inverse (short) ETF and Mutual Fund Definition
These types of funds perform inversely to the performance of the index they are meant to track. For example, if a target investment index (or benchmark) increases by 1%, then a fund that performs inversely to that index would decrease by 1%. Inverse funds work by short selling the intended index, by using derivatives such as futures contracts, and with other exotic financial instruments. The majority if inverse funds are ETF funds, so we'll listed this on the right side of the screen.
Inverse (short) funds are very useful for investors who can't or don't want to short individual stocks. Investors can purchase an inverse (short) fund and get the same advantages as shorting an individual stock. Additionally, Inverse (short) funds can act as a hedge in turbulent markets. An investor can buy their favorite companies and purchase an Inverse (short) fund. If the general stock market were to fall in price, the individual stocks would decrease in value while the Inverse (short) fund would increase in value, thus, creating a hedge. Inverse (short) ETF funds have the potential for unlimited losses, whereas, short selling non-Inverse (short) ETFs or stocks can subject the buyer to unlimited losses. An Inverse (short) ETF will only lose the total amount of the purchase price. Another advantage is investors can purchase Inverse (short) ETFs in their IRA accounts, where short selling is normally prohibited.