New Powershare ETFs Give Exchange Traded Fund Investors
New Ways to Profit in Down Markets
Author: Andy Goldman
Article:
The current markets are getting harder and harder to trade.
It seems everything is going down. Domestic equities,
Emerging markets, Asian markets, and even after a weeks
rally, metals and energy markets have turned down again. So
other then cash is there any place to put your money?
ProShares Advisors has come up with four new funds that
address the problem. These funds are know as the UltraShort
ProShares. These are the first Exchange Traded funds to
provide magnified short exposure to major market indexes.
These funds are designed to provide twice the daily inverse
return of the NASDAQ 100 (QID), S&P 500 (SDS), S&P
Midcap 400 (MZZ), and Dow Jones Industrial Average (DXD).
ProShares has timed the introduction of these funds well.
Investor confidence is weak. Areas such as Emerging
Markets, Japan, and commodities that have attracted a lot
of investor confidence over the past year are now spotty.
Individually these new Exchange Traded Funds can be very
volatile. Investors need to be very aware of what they are
investing in when they invest in these funds. However, used
as part of a larger strategy, these new funds can add a
level of sophistication ETF investors have been looking
forward to for a number of years. ETF investors have always
had the option of shorting funds but this involves setting
up a margin account and a level of risk that many investors
are unwilling to take.
Investing in these new ultra short funds allows investors
to make investments in markets going south without setting
up a margin account and taking on high risk. Investors in
these funds can even play it safer by using these funds as
a hedge to their long positions in index or sector funds.
In this way Exchange traded Fund Investors have even less
at rish because if they are wrong about a market downturn,
they also hold positions that will gain in market
conditions are more favorable. Adding this to the mix is
giving ETF investors many strategies they can use in many
types of markets. Someone who understands the funds and
understands the markets will find it possible to put
together highly sophisticated strategies.
These funds will trade on the American Stock Exchange.
Investors need to take into consideration that these funds
move inversely at twice the rate of the indexes they track.
If over the period of one month the NASDAQ is down 5%, the
QID will gain 10%. This makes for very volatile investing
so take care.
About the author:
Andrew Goldman is president of Metal Rabbit media services,
the
operator of
Get ETF Info He has written a number of
articles on finance and
environment over the last ten years.