UltraShort QQQ ProShares (QID): The Nasdaq fell 14.6% in the first quarter, so this fund doubled the inverse and ended up 31.6%. The "UltraShort" in the name means this fund is designed to do twice the opposite of whatever its underlying index does.
Bear market funds were especially popular the first three months of this year, as the markets proved to be finicky and volatile – up high one day, down low the next. For investors with the stomach for the risk, funds like QID kept the returns coming in. At least, as long as the index it was designed to track kept heading south. The potential for gains in these kinds of funds are as great as the potential for losses, and they should be used with caution.
UltraShort FTSE/Xinhua China 25 ProShares (FXP): China was last year’s darling, finishing up 2007 up by about 55%. In the first quarter of 2008, it has stumbled. The iShares FTSE/Xinhua China 25 (FXI) is down 20.6% year-to-date, sending the UltraShort fund up 21.6%.
Many believe that China still has room to grow and that it will pick up steam, albeit at a slower pace, this year. One portfolio manager predicts 10% growth in 2008, despite the slowdown. China is sinking money into improving its infrastructure under a five-year plan that’s currently in its third year.
The trade surplus in China is set to grow by 22.2% in 2008 while the country’s dependence on exports shrinks. Capital investment is rising, as well.
