As the market continues its sharp declines, there is still a way that investors can profit from exchange traded fund (ETF) investing. Short-selling, or betting against the market, has become a strategy for many who want to hedge their losses in the current market conditions.

Sam Patel for TheStreet reports that the top ETF performers for the third quarter were the inverse, or short, ETFs. These funds are designed to go up whenever the markets go down.

As with any investment, it’s wise to be aware of the risks. While these funds do present opportunities in down markets, investors need to use them with caution. While market whipsaws in a negative direction can bring good news, those in a positive direction can cause quick losses.

Some of the top short ETFs for the third quarter and their performance numbers include:

• UltraShort Basic Materials (SMN), up 85.3%
• PowerShares DB Oil 2X Short (DTO), up 76.5%
• PowerShares DB Commodity Double Short (DEE), up 70.4%
• PowerShares DB AGR Double Short (AGA), up 67.9%

Wall Street’s most recent week has also seen some stunning losses that have benefitted these funds. Among the top short ETFs this week, shown with a one-week performance chart, include:

• Rydex Inverse 2x S&P Select Sector Energy (REC), up 69.2% (black line)
• ProShares UltraShort Telecommunications (TLL), up 79% (green line)

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Tags: AGA, Commodity ETFs, DEE, DTO, Energy, Financial, Green ETFs, Oil, RFN, Sector ETFs, SMN, Telecommunications, TLL