Short exchange-traded funds (ETFs) are investment products that allow investors to gain exposure to the inverse or opposite performance of an underlying benchmark or index. These ETFs use various investment strategies and techniques to generate returns that are negatively correlated to the performance of the underlying index, which means that they can potentially provide higher returns in falling markets and lower returns in rising markets.
Short ETFs can be used by investors to improve their returns in a number of ways. For example, they can be used as a hedging tool to protect against losses in a portfolio by offsetting the impact of market downturns. They can also be used as a tactical investment tool to take advantage of short-term market trends or to implement a bearish market view. Additionally, they can be used in combination with other investments to create a more balanced and diversified portfolio.
Some examples of short ETFs include:
- ProShares Short S&P 500 ETF (SH)
- Direxion Daily S&P 500 Bear 1X ETF (SPDN)
- Invesco S&P 500 Equal Weight ETF (RSP)
- ProShares UltraShort QQQ ETF (QID)
- Direxion Daily Small Cap Bear 3X ETF (TZA)
It is important to note that short ETFs are typically more volatile and risky than traditional long ETFs, and they may not be suitable for all investors. It is always recommended to thoroughly research and carefully consider the risks and potential rewards of any investment before making a decision.