What Is an Inverse ETF?
September 29, 2015 at 13:24 PM EDT
Inverse ETFs are exactly what they sound like: ETFs that try to perform the opposite to whichever stocks they’re tracking. Take for example an S&P 500 ETF. Such a fund will buy shares in the S&P 500 companies and when they go up or down in value the fund does the same. Inverse ETFs aren’t quite that simple because, well, the opposite of buying stocks in the S&P 500 is to short them, and that comes with all sorts of potentially negative outcomes, like bankrupting the fund.