What Is an Inverse ETF?

Business & Management
#1

An inverse ETF is a type of exchange-traded fund (ETF) that profits from a drop in the value of an underlying benchmark by employing different derivatives. Inverse ETFs are comparable to short positions, which entail borrowing assets and selling them in the hopes of repurchasing them at a reduced price. An inverse ETF is also known as a “Short ETF” or “Bear ETF.”

#2

An Inverse ETF is an exchange traded fund (ETF) constructed by using various derivatives to profit from a decline in the value of an underlying benchmark. Investing in inverse ETFs is similar to holding various short positions, which involve borrowing securities and selling them with the hope of repurchasing them at a lower price.

An inverse ETF is also known as a “Short ETF” or “Bear ETF”

  • Inverse ETFs allow investors to make money when the market or the underlying index declines, but without having to sell anything short

  • Higher fees tend to correspond with inverse ETFs versus traditional ETFs