Review of `Reverse Funds`
By The Forex Review - 04 / February / 22 564
Dominick Bell
A couple of posts ago I promised to tell you about reverse funds as one of the hedging tools. Let me briefly remind you that these are ETFs in which you earn when the market falls. At the same time, there are real “beasts” among them, which give you x3 profits with any downward movement of the market. That is, the market fell by 1%, the fund's share increased by 3% (so you earned). But as you know, not everything with them is so simple ...
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The first problem with reverse funds is that they always fall in price. In the gallery you will find 2 TOP ETFs and see how they have declined over the past 10 years (by -99%). And why is that? Yes, because the markets are always growing for a long period, which means these funds are always falling.
The second problem follows from this: it is impossible to keep such funds for a long time, since they are intended for a temporary hedge, a safety net in case of a collapse. For example, in January alone, the sp500 fell by -6%, and the fund with triple leverage for SQQQ (ticker) gave a profit of +33%. That is, you could more than recapture the drawdown in your portfolio if you bought this fund for 10% of the amount. But, as they say, I would know the purchase. And then the fund needs to be sold, as soon it will start falling again, and the markets will grow.
The third problem is that they are not available on the Russian exchanges are not qual.investors. Therefore, there are 2 options here, either get a status, or open an account with a foreign broker and invest there (which I recommend doing).
That's such an interesting math! For any investor's request, we have come up with a dozen tools so that you do not get bored. Well, read the specific names of ETFs and their "stuffing" in the gallery.
For your safety, we have compiled a blacklist of brokers.
