Short exchange traded funds (ETFs) got a boost this week due to the downturn in the market. ProShares Advisors offers 29 short ETFs covering different sectors and levels of leverage. They are designed for tactical asset allocation instead of strategic investing. Jesse Emspak of Investor’s Business Daily reports that markets as a whole rise over time and it is highly unlikely markets will fall for any length of time.
The ProShares ETFs offer a return based on the amount that a given market segment has dropped. There are two strategies investors use to short ETFs. The first is to generate some return while the market is down and the second is to negate the effect that a bad period in a given sector or asset class might have on one’s portfolio.
As with any investment decision, an investor needs to make sure they understand what they are buying and that it fits into their portfolio.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.