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After some research I thought recently that I may want to place some bearish bets in my online broker account. Inverse ETFs (exchange traded funds) are a good way to do that so I wanted to make sure I had a list of short ETFs at my fingertips when and if the need ever arose. So the following etf list is just for my possible future reference. Please let me know if I’ve missed any ETFs (you can also find a list of Long ETFs (Bullish ETFs)):
Inverse / Short S&P 500 ETFs (1x, 2x, 3x)
| ETF Name | Ticker | Leverage | Benchmark Index |
|---|---|---|---|
| Short S&P 500 | SH | 1x | S&P 500 |
| Short Mid Cap 400 | MYY | 1x | S&P Mid Cap 400 |
| Short Small Cap 600 | SBB | 1x | S&P Small Cap 600 |
| UltraShort S&P 500 | SDS | 2x | S&P 500 |
| UltraShort Mid Cap 400 | MZZ | 2x | S&P Mid Cap 400 |
| UltraShort Small Cap 600 | SDD | 2x | S&P Small Cap 600 |
| UltraPro Short S&P 500 | SPXU | 3x | S&P 500 |
| Direxion S&P 500 Bear 3x | SPXS | 3x | S&P 500 Index |
| Direxion Mid Cap Bear 3x | MIDZ | 3x | S&P Mid Cap 400 Index |
| UltraPro Short Mid Cap 400 | SMDD | 3x | S&P Mid Cap 400 |
Inverse / Short NASDAQ ETFs (1x, 2x, 3x)
| ETF Name | Ticker | Leverage | Benchmark Index |
|---|---|---|---|
| Short QQQ | PSQ | 1x | Nasdaq 100 |
| UltraShort QQQ | QID | 2x | Nasdaq 100 |
| UltraPro Short QQQ | SQQQ | 3x | Nasdaq 100 |
Inverse / Short Russell 2000 ETFs (1x, 2x, 3x)
| ETF Name | Ticker | Leverage | Benchmark Index |
|---|---|---|---|
| Short Russell 2000 | RWM | 1x | Russell 2000 |
| UltraShort Russell 2000 | TWM | 2x | Russell 2000 |
| UltraPro Short Russell 2000 | SRTY | 3x | Russell 2000 |
| Direxion Small Cap Bear 3x | TZA | 3x | Russell 2000 |
| UltraShort Russell1000 Value | SJF | 2x | Russell 1000 Value |
| Direxion Financial Bear 3x | FAZ | 3x | Russell 1000 Financial Services |
| UltraShort Russell1000 Growth | SFK | 2x | Russell 1000 Growth |
| UltraShort Russell Mid Cap Value | SJL | 2x | Russell Mid Cap Value |
| UltraShort Russell Mid Cap Growth | SDK | 2x | Russell Mid Cap Growth |
| UltraShort Russell 2000 Value | SJH | 2x | Russell 2000 Value |
| UltraShort Russell 2000 Growth | SKK | 2x | Russell 2000 Growth |
Inverse / Short Dow Jones ETFs (1x, 2x, 3x)
| ETF Name | Ticker | Leverage | Benchmark Index |
|---|---|---|---|
| Short Dow 30 | DOG | 1x | Dow Jones Industrial Average |
| UltraShort Dow 30 | DXD | 2x | Dow Jones Industrial Average |
| UltraPro Short Dow 30 | SDOW | 3x | Dow Jones Industrial Average |
| UltraShort Basic Materials | SMN | 2x | Dow Jones U.S. Basic Materials |
| UltraShort Consumer Goods | SZK | 2x | Dow Jones U.S. Consumer Goods |
| UltraShort Consumer Services | SCC | 2x | Dow Jones U.S. Consumer Services |
| UltraShort Financials | SKF | 2x | Dow Jones U.S. Financials |
| UltraShort Health Care | RXD | 2x | Dow Jones U.S. Health Care |
| UltraShort Industrials | SIJ | 2x | Dow Jones U.S. Industrials |
| UltraShort Real Estate | SRS | 2x | Dow Jones U.S. Real Estate |
| UltraShort Semiconductors | SSG | 2x | Dow Jones U.S. Semiconductors |
| UltraShort Oil & Gas | DUG | 2x | Dow Jones U.S. Oil & Gas |
| UltraShort Technology | REW | 2x | Dow Jones U.S. Technology |
| UltraShort Utilities | SDP | 2x | Dow Jones U.S. Utilities |
Inverse / Short Emerging Markets ETFs (1x, 2x, 3x)
| ETF Name | Ticker | Leverage | Benchmark Index |
|---|---|---|---|
| Short MSCI Emerging Markets | EUM | 1x | MSCI Emerging Markets Index |
| UltraShort MSCI Emerging Markets | EEV | 2x | MSCI Emerging Markets index |
| Direxion Emerging Markets Bear 3x | EDZ | 3x | MSCI Emerging Markets Index |
Trading and Researching ETFs
To compare online brokers for trading ETFs, read our online broker guide and use the StockBrokers.com comparison tool. I recommend Fidelity which has the best ETF research tools (ETF screeners, charting, third-party reports, etc) and overall experience for ETFs.
Know What’s in Your ETF and How the ETF is Calculated
One of the Fast Money guys mentioned the UltraShort Oil & Gas ProShares ETF (DUG) on a recent show. He questioned how that ETF, which is the double inverse of oil & gas could be up for the day while oil was also up. A quick look at what DUG actually is gives the answer:
UltraShort Oil & Gas ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Oil & Gas IndexSM
That “daily” part adds one complication to the picture. From the article ‘Understanding ProShares’ Long-Term Performance’ on ProShares’ site:
ProShares are designed to provide either 200%, -200% or -100% of index performance on a daily basis (before fees and expenses).
A common misconception is that ProShares should also provide 200%, -200% or -100% of index performance over longer periods, such as a week, month or year. However, ProShares’ returns may be greater than or less than what you’d expect over longer periods.
The article goes on to explain how & why this happens. But the question about how DUG could be up while the price of oil was also up is answered by looking at what comprises DUG — the Dow Jones U.S. Oil & Gas Index. That index “measures the performance of the energy sector of the U.S. equity market. Component companies include oil drilling equipment and services, coal, oil companies-major, oil companies-secondary, pipelines, liquid, solid or gaseous fossil fuel producers and service companies.”
Note that the actual price of oil is not mentioned. When you look at how that index is constructed you’ll see that ExxonMobil Corp. (XOM) makes up 28%, Chevron Corp. is 11% and ConocoPhillips is 7%. So at least 46% of the index is big oil companies (major integrated oil & gas). Then the question is how does the price of oil relate to movements in those oil companies? Or more broadly, how do ETFs compare against the underlying over longer periods of time?
Below I’ve plotted oil ($WTIC) vs. the ETF tracking oil (USO) over the last 10 years.
This shows that the price of oil has seriously outperformed the ETF, USO. Bottom line, be careful with which ETFs you are holding long.
On any given day, ETFs and the underlying asset can trade opposite each other. And that means that DUG, on any given day, could trade with oil instead of opposite oil. I think many people would assume that if oil was down 5% DUG would be up 10%. That’s clearly not a good assumption to make I’m seeing a lot of people talking about buying DUG to profit from a drop in oil prices. Given the performance data above I think they’d be better off shorting USO. (That is, if they can find shares of it to borrow — I’ve had problems with that in the past.) Puts on USO may do the trick too.
Hopefully those who are trading DUG know that they’re not playing the price of oil directly and won’t be surprised on days like today when DUG and oil trade in the same direction. You’ve always got to know what comprises any ETF. I know that Google directs a lot of people to my list of inverse ETFs who are specifically searching for a way to short oil. Hopefully they do more research than just look at the name of the ETF and really find out what they’re getting.
For more on this topic, ETFDB has a good post, 7 Risks of Trading Leveraged ETFs and How to Avoid Them.
