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.

Daily ETF Watch

ETF Watch: EquityCompass Funds Debut

First Trust rolls out two active ETFs managed by EquityCompass Strategies.

Daily Hot Reads

Tuesday Hot Reads: The Ugly Math Behind Leveraged ETFs

Also, how factor ETFs have performed over the past year.

Daily ETF Watch

ETF Watch: Triple Exposure Oil Funds Launch

New ETFs offer 300%, -300% exposure to performance of crude oil futures. 

Daily Hot Reads

Friday Hot Reads: SEC May Regret The Day It Allowed Leveraged ETFs

Also, Wall Street sours on buyback ETFs as stock repurchases wane.

ETF.com Analysis

A Response To Jim Cramer’s ‘Why I’m Against ETFs’

CNBC’s Mad Monday host misconstrues some ETFs benefits as liabilities.

ETF.com Analysis

Always A Change Of Storms With Volatility ETFs

Investors need to understand the nature of short-term VIX funds like XIV and SVXY.

Daily ETF Watch

ETF Watch: A Dozen Closures Scheduled

After a slow start to the year for closures, it looks like March will at least match its level of fund shutdowns from the prior year.

Features and News

Morgan Stanley Fined $8M For Inverse ETF Sales

SEC settlement involved geared funds in retirement accounts.

Daily Hot Reads

Wednesday Hot Reads: 3 Tips For Finding Your First ETF

Also, why that leveraged ETF is a bad idea.