10 Inverse ETFs That Gain in a Bear Market

For those of you who favor contrarian approaches to investing, here's an interesting suggestion from this week's U.S. News Invested for profiting in this bear market -- Inverse ETFs.  Enjoy and enjoy this beautiful weekend.  

JULY 8, 2022 Invested Advice, rankings and stock market news for investors.

Good morning, investors. Markets post healthy gains, and GameStop decides to make a split. Highlights of today's newsletter include our market insights plus these new articles: 10 Inverse ETFs That Gain in a Bear Market 7 High-Return, Low-Risk Investments for Retirees 7 Best Stablecoins to Buy Now 7 Risky Leveraged ETFs to Watch 16 Things You Need to Know Now About Annuities TODAY'S FEATURED ETF STORY 10 Inverse ETFs That Gain in a Bear Market Let's do the disclaimers first: Inverse exchange-traded funds, or ETFs, particularly leveraged funds that aim to deliver twice or even three times the returns of an underlying index, are inherently risky long-term bets. History shows that stocks of all varieties tend to generally rise over the long term, and research shows market-timing techniques often cause investors more harm than good. That said, if you're tired of seeing your portfolio bleed red ink this year, it may be worth exploring the universe of inverse ETFs that are out there. As the name implies, these funds go up when the market goes down. The opposite is true too – they tend to crash when the market is surging – so you need to know when to get out. However, the following 10 funds all have shown the potential to deliver big short-term gains in 2022 for investors willing to take on a bit more risk via this strategy: ProShares UltraPro Short QQQ (ticker: SQQQ). The largest inverse ETF by assets under management at present is SQQQ, with roughly $4 billion in assets. It is linked to the Nasdaq-100 index of the largest stocks on this tech-heavy exchange – but keep in mind it is also a leveraged fund, meaning that instead of just moving the opposite direction of its benchmark, it moves even faster. Specifically, SQQQ is a 3X fund that is built to move three times in the opposite direction of the Nasdaq-100. This doesn't always line up with long-term performance, as its calculated on a daily basis, but year to date SQQQ is up about 80% as of this writing compared with a roughly 27% decline for the index it tracks. ProShares Short S&P 500 (SH). Another very popular inverse fund, this product is designed to deliver the opposite performance of the S&P 500. It is not leveraged and the strategy is simply for a 1-to-1 inverse on a daily basis. As a result, SH has risen about 20% so far this year as the benchmark S&P 500 index of large-cap stocks has moved about 20% in the opposite direction. Unlike the leveraged SQQQ, which is most commonly a vehicle for speculators, SH has nearly $3 billion in assets in part because some investors use this product as a hedge, or "insurance," against declines given its liquidity and ties to the preeminent U.S. equity index. Click here to continue reading.