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Inverse debt funds and ETFs (exchange-traded funds) are financial instruments that move in the opposite direction of their target index. For instance, if the index is falling, the inverse debt funds will go up. Since such instruments move in the opposite direction of the target index, they serve as a useful hedging tool.

Generally, such funds aim to generate a return equaling negative 1 to 3 times the daily return of the reference index. In this article, we will take a look at the 10 best performing trading inverse debt funds. Trading funds are more useful to active traders than to long-term investors.

Ten Best Performing Trading Inverse Debt Funds

We have used the past one-year return data of trading inverse debt funds to rank the 10 best performing trading inverse debt funds. For our list we have considered both mutual funds and ETFs.

10. Rydex Inverse Government Long Bond Strategy Fund (RYAQX, 9%)

The Rydex Inverse Government Long Bond Strategy Fund aims to achieve returns that correlate inversely with the price movement of the Long Treasury Bond for U.S. Treasury debt instruments or specific futures contracts on a daily basis.

This fund has returned over 18% in the last three months, and it has more than $140 million in total assets. The top three holdings of the fund are: United States Treasury Bonds 1.875%, Guggenheim Ultra Short Duration Instl, and Guggenheim Strategy II.

9. ProFunds Rising Rates Opportunity Fund (RRPIX, 10%)

The ProFunds Rising Rates Opportunity Fund aims to achieve daily investment results that correspond to -1.25 times the daily performance of the most recently issued 30-Year U.S. Treasury Bond. This fund has returned over 22% in the last three months, and it has more than $650 million in total assets.

8. ProShares Short 20+ Year Treasury (TBF, 11%)

The ProShares Short 20+ Year Treasury ETF aims to achieve daily investment results that correspond to the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. This ETF has returned almost 22% year-to-date, and it has more than $35 million in total assets.

7. ProShares UltraShort 7-10 Year Treasury (PST, 15%)

The ProShares UltraShort 7-10 Year Treasury ETF aims to achieve daily investment results that correspond to two times the inverse of the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index. This ETF has returned over 19% year-to-date, and it has more than $120 million in total assets. PST has only invested in United States Treasury Bills.

6. Direxion Monthly 7-10 Year Treasury Bear 2X Fund (DXKSX, 17%)

The Direxion Monthly 7-10 Year Treasury Bear 2X Fund invests in the financial instruments that offer inverse or short leveraged exposure to the index (ICE U.S. Treasury 7-10 Year Bond Index). This fund has returned almost 18% year-to-date, and it has more than $5 million in total assets.

5. ProShares UltraShort 20+ Year Treasury (TBT, 22%)

The ProShares UltraShort 20+ Year Treasury ETF aims to achieve investment results that correspond to two times the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. This ETF has returned almost 47% year-to-date, and it has more than $1.30 billion in total assets.

4. Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO, 22%)

The Direxion Daily 7-10 Year Treasury Bear 3X Shares ETF normally invests in short positions, futures contracts, swap agreements, and other instruments that offer inverse or short leveraged exposure to the index (ICE U.S. Treasury 7-10 Year Bond Index). This ETF has returned over 29% year-to-date, and it has more than $60 million in total assets.

3. Access Flex Bear High Yield Pro Fund (AFBIX, 24%)

The Access Flex Bear High Yield Pro Fund aims to maintain inverse exposure to the high yield market irrespective of the market conditions and without entering defensive positions in cash or other instruments. This fund has returned almost 9% in the last six months, and it has more than $1 million in total assets.

2. Direxion Daily 20+ Year Treasury Bear 3X Shares ETF (TMV, 28%)

The Direxion Daily 20+ Year Treasury Bear 3X Shares ETF normally invests in swap agreements, futures contracts, short positions, or other financial instruments that offer inverse or short leveraged exposure to the index (ICE U.S. Treasury 20+ Year Bond Index). This ETF has returned over 74% year-to-date, and it has more than $530 million in total assets.

1. ProShares UltraPro Short 20+ Year Treasury (TTT, 30%)

The ProShares UltraPro Short 20+ Year Treasury ETF aims to achieve daily investment results that are in line with three times the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. This ETF has returned over 74% year-to-date, and it has more than $380 million in total assets.