During the recent China A-Shares plunge, the Direxion Daily CSI 300 China A Share Bear 1x Shares (NYSEArca: CHAD) has experienced tremendous interest as investors tried to capitalize off the plunge. Additionally, when traders though the Chinese selling was overdone, people utilized the Direxion 2x Daily CSI 300 China A Share ETF (NYSEArca: CHAU) to capture a rebound.
Jonathan Chatfield, Chief Portfolio Manager for Probabilities Fund Management, also mentioned that leveraged and inverse ETFs may help capture areas of interest in a tactical portfolio when political or event-driven decisions may affect a market over the short-term.
“For periods believed to have the highest probability of gains, leverage may be used to increase potential returns,” Chatfield said.
Biff Robillard, President of Bannerstone Capital Management, also argues that inverse Treasury bond ETFs, such as the Direxion Daily 20-Year Treasury Bear 3X (NYSEArca: TMV) and the Direxion 7-10 year Treasury Bear 3x (NYSEArca: TYO), could help hedge a long fixed-income investment portfolio against a turn in the Treasuries market if interest rates begin to rise.
Financial advisors who are interested in learning more about geared ETFs for managing risks can listen to the webcast here on demand.