Inverse ETF Overview

Inverse ETFs are powerful and complex trading instruments. They allow traders to benefit from price declines in major ETFs. For example, if the SPDR S&P 500 fund (SPY) goes down 1% on one day, you should expect that the price of ProShares Short S&P 500 ETF (SH) goes up 1% the same day. Inverse ETFs can use leverage as well to magnify their returns. Thus, these inverse-leveraged ETFs need to be handled with care.

Keep in mind that inverse ETFs deliver the desired returns over prespecified periods only—usually one day. Thus, the stated multiple (e.g., - 2x) of the fund's underlying index only attempts to do so over one-day holding periods. Consequently, inverse ETFs can be inappropriate investment vehicles to hold if you have a significantly longer holding period in mind.

With 127 ETFs traded in the U.S. markets, Inverse ETFs gather total assets under management of $13.87B. The average expense ratio is 1.01%. Inverse ETFs can be found in the following asset classes:

  • Equity
  • Commodities
  • Alternatives
  • Fixed Income
  • Currency

The largest Inverse ETF is the ProShares UltraShort 20+ Year Treasury TBT with $2.16B in assets. In the last trailing year, the best performing Inverse ETF was the KOLD at 39.80%. The most-recent ETF launched in the Inverse space was the BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged ETN FNGD in 01/22/18.

TOP ETF PERFORMERS

GASXDirexion Daily Natural Gas Related Bear 3x Shares52.17%
DRIPDirexion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares48.87%
ERYDirexion Daily Energy Bear 3X Shares40.58%
DGAZVelocityShares 3X Inverse Natural Gas ETN36.83%
DBRTAxelaTrader 3x Inverse Brent Crude Oil ETN31.54%

BOTTOM ETF PERFORMERS

XIVVelocityShares Daily Inverse VIX Short-Term ETN-95.83%
VMINREX VolMAXX Short VIX Weekly Futures Strategy ETF-92.00%
SVXYProShares Short VIX Short-Term Futures ETF-90.66%
EXIVVelocityShares 1X Daily Inverse VSTOXX Futures ETN-40.58%
ZIVVelocityShares Daily Inverse VIX Medium-Term ETN-25.21%

top creations

SVXYProShares Short VIX Short-Term Futures ETF1,015.66
XIVVelocityShares Daily Inverse VIX Short-Term ETN731.40
DGAZVelocityShares 3X Inverse Natural Gas ETN445.57
DUSTDirexion Daily Gold Miners Index Bear 3x Shares175.11
DWTVelocityShares 3x Inverse Crude Oil ETN135.78

top redemptions

UUPPowershares DB U.S. Dollar Index Bullish Fund-33.61
YCSProShares UltraShort Yen-25.32
SHProShares Short S&P500-23.21
HDGEAdvisorShares Ranger Equity Bear ETF-13.81
SPXUProShares UltraPro Short S&P500-11.64

AUM WINNERS

GASXDirexion Daily Natural Gas Related Bear 3x Shares66.19%
RXDProShares UltraShort Health Care65.75%
CHADDirexion Daily CSI 300 China A Share Bear 1X Shares42.49%
SZKProShares UltraShort Consumer Goods41.93%
REWProShares UltraShort Technology36.12%

AUM LOSERS

SSGProShares UltraShort Semiconductors-37.10%
JDSTDirexion Daily Junior Gold Miners Index Bear 3X Shares-26.30%
GDXSProshares Ultrashort Gold Miners-24.25%
VMINREX VolMAXX Short VIX Weekly Futures Strategy ETF-23.51%
DRIPDirexion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares-21.57%

Daily ETF Watch

ETF Week: VIX ETN Closing; Franklin Adds ETFs

A variety of developments took place this week in the ETF space.

Daily ETF Watch

VIX ETN’s Closure Accelerated

Spike in volatility hits inverse VIX product hard.

Weekly ETF Flows

Weekly ETF Outflows Total $19B

Investors took money out of ETFs, but most of that was from one fund.

Daily ETF Watch

Direxion Plans 6 Leveraged ETFs

Three pair of ETFs offer 200% and 300% of the returns of some important indexes.

Features and News

Inverse VIX ETN Shuts Down

One of the two largest inverse VIX ETFs will soon cease trading.

Daily Hot Reads

Tuesday Hot Reads: Insurers Bring Own Assets To ETFs

Also, BlackRock calls for tighter regulation around geared products.

Features and News

Historic Vol Spike Rattles 2 Inverse VIX ETPs

Inverse VIX ETFs lose nearly all of their value following Monday’s historic increase in the Cboe volatility index. 

Features and News

Why Dollar's Falling With Bond Yields Surging

How the greenback recently hitting three-year lows impacts investors.

Features and News

ETF Education: The Problem With Inverse/Leveraged ETFs

The vehicles used to place these trades often have poor returns.