Investors are increasingly less content do just sit there holding cash while the market tumbles, giving short exchange traded funds (ETFs) a measure of popularity. The trend has been especially popular this year as each week seems to bring only more bad news. There’s no telling when things will turn around, say investors, so why not turn lemons into lemonade?
ProShares is a leading provider of the short fun. The firm has seen more than $4 billion flow into its offerings this year, one of the largest tallies in the industry, reports Rob Wherry of Smart Money.
As the next few weeks are anticipated to be rough ones for Wall Street, some investors are taking advantage of these vehicles to keep their balances from shrinking. While many want to try and take advantage of these funds for the current market conditions, use them with caution. The risks when there’s a turnaround are great.
A few of the short ETFs available are:
- ProShares UltraShort S&P 500 (SDS): up 22% this year. This strategy can help offset risk, keep taxes to a minimum, and protect principal.
- MacroShares Oil Up (UCR): up 55%; may be used as a tax hedge.
- ProShares Short QQQ (PSQ): up 18.8% year-to-date; posts the inverse return on the Nasdaq’s 100 largest non-financial stocks.
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.