7 Inverse ETFs That Soared More Than 70% In Q4

After registering its best-third quarter gain in many years, Wall Street finds itself in a vicious cycle in the final quarter, placing all the three indices into the correction territory. Higher interest rates in the United States, political malaise in Europe, U.S.-China trade woes, a slowdown in Japan and emerging markets and threats of a global slowdown have created tensions in the equity world.

Oil has slipped into the bear territory leading to further caution among investors. Additionally, the lower-than-expected Fed’s dovish view for the next year in the latest FOMC meeting also made investors jittery. Further, technology, once a hot and soaring segment, dragged down the broader market in recent months, triggered by rounds of selling in FAANG stocks and other big giants.

With the recent slump, the S&P 500 is on track for its first annual loss in a decade while the Dow Jones is expected to log its worst year since 2008.

The myriad woes have resulted in a huge demand for inverse or leveraged inverse ETFs for investors seeking to make big gains in a short span. These products either create an inverse (opposite) position or leveraged (2x or 3x) inverse position in the underlying index through the use of swaps, options, future contracts, and other financial instruments.

In fact, many products have generated outsized gains (over 70%) so far in the fourth quarter though these involve a great deal of risk when compared to traditional products. Below, we have highlighted some ETFs that crushed the market and should continue doing so at least for the near term if the same trends persist.

Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (DRIP - Free Report) – Up 245.2%

This fund seeks three times inverse exposure of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. DRIP has accumulated $42.6 million in its asset base and trades in a solid volume of around 5 million shares a day on average. The fund charges 95 bps in annual fees.

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