Inverse ETFs To Bet On Market Sell-off
Zacks Investment Research | Jan 05, 2020 08:00PM ET
Geopolitical tensions took center stage at the start of the New Year. A U.S. drone strike near Baghdad international airport Iraq Attack: Sector ETF Winners and Losers ).
Investors should note that the United States’ sanctions against Iran were put into place in August 2018. The sanctions were on cars, metals and minerals as well as U.S. and European aircraft. The second part of the sanctions that bans import of Iranian energy was enacted in November 2018.
The result of the U.S. air strike and the killing of Iranian commander was Iraq’s demand for an expulsion of pulling back from the 2015 nuclear deal . Strategists expect the U.S.-Iran tensions to flare up in the medium term.
Germany called for “VXX gaining about 5.3% on Jan 3.
Global equities fell with the S&P 500-based ETF SPDR S&P 500 ETF Trust (ASX:SPY) and SPDR Dow Jones Industrial Average (NYSE:DIA) ETF Trust (TSXV:DIA) losing about 0.8% and Invesco QQQ Trust ACWI was off 0.9% on Jan 3. Safe-haven trade intensified as the yield on the 10-year benchmark U.S. Treasury fell to 1.80% on Jan 3 from 1.88% recorded the earlier day.
How to Profit
Given the upheaval, investors could easily tap the opportunity by going short on global equities, at least for the near term. Below we highlight a few of them (read: Guide to the 10 Most-Popular Leveraged Inverse ETFs ).
S&P 500
Investors can go against the S&P 500 with ProShares Short S&P500 ETF SPDN (up 0.7% on Jan 3).
Dow Jones
Investors intending to play against the tumbling Dow Jones, may tap ProShares Short Dow 30 SDOW (up 2.4% on Jan 3).
Nasdaq
ProShares Short QQQ (ASX:PSQ) (up 0.8% on Jan 3), ProShares UltraShort QQQ SQQQ (up 2.7% on Jan 3) are good to play against the Nasdaq.
Small-Cap
One can short small-cap U.S. equities with ProShares Short Russell2000 (PS:RWM) (up 0.4% on Jan 3).
EAFE
ProShares Short MSCI EAFE Country ETFs to Top/Flop on US Air Raid at Baghdad ).
Emerging Markets
Short MSCI Emerging Markets ProShares EUM added more than 1.7% on Jan 3. The fund tracks the inverse (opposite) of the daily performance of the MSCI Emerging Markets Index. The index covers equites from 21 emerging market country indexes.
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