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Parker

What are inverse ETFs and is it a good idea to invest in them?

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Hallo there,

I would love to know more about inverse ETFs and if you would advise me to invest in them.

 

 

 

 

 

 

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Hi Parker,

 

Inverse ETFs also known as short ETFs, are products that help you make a gain once a given investment class drops in value. That is, inverse ETFs earn you a profit when it is inverse against the benchmark or the interest it tracks.

Inverse ETFs are best for small holdings within a big portfolio and for short-term purposes only. An inverse ETFs intention is to offer a single day trading bet and must not be held longer than a day.

To trade in inverse ETFs, you must track a set of investments or an underlying index that you think will go down in value. Similarly, you must rely on extremely volatile tools like future and short selling contracts.

If you thrive in volatility and anticipate high returns by going against the tide, you should definitely go for inverse ETFs.

 

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