Rocky Market Boosts UltraShort ETFs
June 27th at 1:02pm by Tom Lydon
The recent market dip has left investors pondering if they should move to cash or go ultrashort on an exchange traded fund (ETF). Joanne Von Alroth for Investor’s Business Daily says that depends on whether you’re a bull or a bear. Despite sell-offs and slumps, the Dow is within 2.5% of its recent high and staying above its 200-day moving average.
Take for example, the ETF ProShares Ultra Dow 30 (DDM). The year-old fund seeks investment results at twice the performance of the Dow 30 industrial average. For every 1% the index moves, the ETF moves 2%, but the opposite is true when the Dow declines. For the past week, DDM is down 5.3% and the Dow is down 2.2%. UltraShort ETFs give double the opposite of the market return and are seen as "bearish" ETFs. ProShares UltraShort Dow 30 (DXD) is up 5.5% for the week.
