What Is an Inverse ETF? Definition, Purpose & Examples

What are inverse ETFs and how do they work?

Inverse ETFs, also known as bear ETFs or short ETFs, are pooled investment vehicles that allow investors to profit when a sector, index, or market declines. They are similar to traditional ETFs in that they allow exposure to a wide variety of stocks with a single investment, but they are different in that they are structured to to deserve value when the securities they follow losses where the. They achieve this by using various derivative securities – such as futures, options, swaps, and the like – to profit when the stocks and assets they track fall in price.

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