Best Inverse ETFs Of 2024 (2024)

The ProShares UltraShort MSCI EAFE strives for a daily return that is two times the inverse return of the MSCI EAFE international index. The fund seeks to profit from declines in the international developed stock market, excluding the U.S. and Canada. EFU’s benchmark index is exposed to companies from 21 markets.

Approximately half of the fund’s companies are located in Japan, the United Kingdom and France. The inverse ETF is designed for short-term traders who strive to hedge against market declines and profit from them.

EFU is successful in offering a return that is the inverse of the Europe, Asia and Far East developed markets. If your portfolio consists of securities that have predominantly long positions, EFU would diversify your portfolio and counteract declining daily returns from an international fund.

With three times the inverse daily return of the , this is a very aggressive ETF. If the market declines on the day you buy SPXU, you’ll potentially earn three times the inverse of the decline, provided that you sell at the end of the day. The fund sells short the companies in the S&P 500 stock market index, which includes the most important large- and mid-cap companies in the U.S.

Experienced traders who strive to counter long positions in the S&P 500 will find 300% inverse leverage in the S&P 500, but this and the other inverse ETFs on the list are not designed to be held for longer than one day. Only the most aggressive and experienced investors should trade SPXU.

The ProShares UltraSort Russell2000 aims to deliver the inverse daily returns of the performance of the Russell 2000 market index. The Russell 2000 tracks a market cap-weighted index of 2,000 of the smallest U.S. publicly traded companies in the Russell 3000 Index. TWM includes small companies across various sectors and industries.

Similar to all of the inverse ETFs on the list, TWM is best suited for daily traders, particularly those who are familiar with the small-cap U.S. investment market. The 200% inverse returns of the index deliver roughly twice the inverse of the performance of the index, which is stellar on days the index declines, but quite damaging when the small-cap market advances.

Cathie Wood is a well-known American investor and head of investment firm ARK Invest. Her firm’s flagship fund, the ARK Innovation ETF (ARKK), garnered headlines and praise when it soared about 153% in 2020.

ARKK invests in disruptive technology companies from industries such as DNA technology, automation, robotics and artificial intelligence. But many investors believe that what goes up must come down. So, for investors who trust that a fund like ARKK is bound to pull back from time to time, AXS Investments launched its Short Innovation Daily ETF. That fund, SARK, in effect bets against ARKK by shorting it.

SARK was launched in late 2021 to profit from ARKK’s volatility and to deliver approximately 100% inverse returns of the fund. SARK uses swap agreements. SARK is highly concentrated with about 68% of its holdings in the software, internet, biotechnology and auto manufacturers industries.

SARK is appropriate for active and knowledgeable traders who understand the new technology arena. As with our other inverse ETFs, SARK is a short-term ETF, suitable only for single-day trading.

For those who want to profit from a decline in the S&P MidCap 400—commonly known as the S&P 400—companies, SMDD fills that need. This inverse ETF is a daily trading vehicle that strives to deliver a 300% inverse return of the S&P 400. The index includes 400 mid-sized companies with a market cap between $5.2 billion and $14.5 billion, and falls between the S&P small- and large-cap indexes.

SMDD might be suitable for active traders seeking to profit or hedge against an expected decline in mid-cap stocks. Other investors who want to underweight mid-caps might also consider SMDD.

ProShares UltraShort MSCI Emerging Markets pursues a daily 200% inverse return of the MSCI Emerging Markets Index. This emerging markets index includes a group of 1,437 companies and incorporates large- and mid-capitalization companies. The index spans 24 emerging markets countries such as China, India, Taiwan and Brazil.

EEV provides twice the inverse of the daily returns of the MSCI Emerging Markets Index. Designed to be traded and held for no longer than one day, this inverse ETF enables investors to profit when the emerging market companies are declining. Active traders might set a trigger to alert them when the index is falling.

Be aware that this is an advanced investment strategy, and investors will lose twice the index’s gain when the underlying index rises instead of falls.

The tech-heavy Nasdaq 100 Index is the ProShares UltraPro Short QQQ ETF’s target. The Nasdaq 100 includes 100 of the largest U.S. and international non-financial companies listed on the Nasdaq Stock Market. This index includes companies from several of the fastest growing market sectors, including computer hardware and software, telecommunications and biotechnology.

Built to deliver three times the inverse performance of the Nasdaq 100, when stocks like Apple, Microsoft, Amazon, Nvidia, Meta, Tesla and Alphabet decline, SQQQ investors score gains that amount to triple the index’s loss.

Remember, a triple inverse performance fund is quite risky. When its target index rises, SQQQ can plunge. If you invest on a day when the Nasdaq-100 Index climbs, you’ll lose approximately 300% of that daily gain. Like all of our inverse ETFs, SQQQ is best suited to experienced single-day traders.

Do you have a love-hate relationship with bonds and bond funds? If you want to make money when intermediate Treasury bond returns decline, The ProShares UltraShort 7-10 Year Treasury ETF is worth a look.

PST is designed to deliver twice the inverse return of the ICE U.S. Treasury 7-10 Year Bond Index. That Treasury index includes bonds with remaining maturities greater than seven years and less than or equal to 10 years, and whose outstanding face values are $300 million or more. The index doesn’t include inflation-linked treasury securities, Treasury Bills, or government agency debt. It also excludes zero-coupon issues that have been stripped from coupon-paying bonds.

PST is suitable for any aggressive investor, especially those who are familiar with Treasury bond pricing. When interest rates are rising and bond values are declining, PST is positioned to offer traders a profit. The inverse ETF is designed for daily, not long-term trading.

More volatile than intermediate term Treasury bonds, long term treasuries offer a unique hedging and trading opportunity for aggressive investors who are familiar with bond price movements. Another ProShares offering, ProShares UltraShort 20+ Year Treasury’s underlying benchmark is the ICE U.S. Treasury 20+ Year Bond Index. This long-term treasury proxy includes U.S. fixed-rate debt with maturities of 20 years or more.

The opportunity for large price swings in the 20-plus-year treasury market provides both greater risk and opportunity for inverse ETF investors.

Like other inverse ETFs on our list, TBT is designed to be held for no more than one day. TBT investors profit when the U.S. Treasury Bonds with remaining maturities greater than 20 years decline in price. In general, bond prices decline as interest rates rise. But the correlation is imperfect on a daily basis, and more reliable over the long term.

ProShares UltraShort Real Estate ETF is a fund for traders who are familiar with the real estate securities sector and who aim to profit from declines in the real estate market. SRS is benchmarked against the S&P Real Estate Select Sector, a popular proxy for real property companies.

Within the benchmark fund are 31 diverse real estate companies from the industrial, management, office, health care, residential and retail sectors. The benchmark real estate fund is heavily weighted toward specialized, residential and industrial REITs.

With the recent run-up in interest rates, the real estate sector has tumbled. Savvy traders who understand real estate market movements might target daily inverse investing in SRS when a drop in REIT values is expected.