Inverse Strategies

A final option for investors who foresee a market crash on the horizon is to invest in market-hedged products providing for protection from specific downside risks. A number of these investments exist, with some of the most well-known of these investments being inverse exchange-traded funds (ETFs) and leveraged inverse ETFs. Examples include the AdvisorShares Ranger Equity Bear ETF ( $Advisorshares Trust Ranger Equity Bear Etf(HDGE.US)$ ) and the ProShares UltraShort NASDAQ Biotechnology ETF ( $ProShares UltraShort Nasdaq Biotechnology(BIS.US)$ ). These funds take an active inverse market position that seeks to benefit from a market downturn or crash. Leveraged inverse ETFs take the short-side protection one step further by employing leverage to enhance the gains from short-selling positions. These inverse funds are designed specifically for situations where severe losses can be incurred from a market downturn.