What are Bear ETFs?
First, ETF stands for exchange-traded fund. ETFs are an investment vehicle traded on a stock exchange, much like stocks. ETFs holds assets such as stocks or bonds. Most ETFs track an index, such as the S&P 500 or the Dow Jones Industrial Average, or a specific industry sector, such as financial or bio-tech stocks.
Generally, an ETF combines the valuation feature of a traditional mutual fund which can be purchased or redeemed only at the end of each trading day for its net asset value, with the trade-ability feature of a stock, which trades throughout the trading day .
For additional general information on exactly how ETFs are structured, see How ETFs Work. For detailed information about a specific ETF, click on its symbol in the list below, and then follow the link to the fund sponsor's web site.
"Bear" ETFs are a special class of ETFs that sell short, buy put options, sell futures contracts, use leverage or employ other strategies to increase in value as the underlying assets decrease in value. Conversely, if the underlying assets increase in value, a Bear ETF will decrease in value. (See also Bear Mutual Funds.)
CAUTION! Some Bear ETFs are leveraged so as to track 200%(2x) or even 300% (3x) of the inverse of the change in the underlying assets. This can create extreme volatility in the price of the Bear ETF. The degree of leverage is usually indicated in the ETF's name. If "2x", "3x", "UltraShort" or similar wording is not indicated, the ETF is probably not leveraged more than 100% against the underlying assets. Check the ETF's web site to be sure.
CAUTION! Most Bear ETFs are designed to track the inverse of the performance of the underlying assets on a daily basis. The Bear ETF may be reset to the underlying assets every day, and over time, the long-term tracking correlation between the Bear ETF and the underlying assets may "fade" due to the compounding of daily returns. For further information, please see:
- Understanding Long-Term Performance of Leveraged and Short Funds
- Leveraged and Inverse ETFs: Not Right for Everyone
- each ETF's web site (see Fund Sponsor Info below)
Invest carefully, at your own risk. Please read the disclaimer.
Our new and improved Bear ETFs Scoreboard is presented below (Scoreboard tab).
- Funds are listed in ticker symbol order.
- Last trade is on a 15-20 minute delay as required by the exchanges. The quote is updated automatically every minute throughout the trading day.
- For additional information on each fund, click on its ticker symbol.
