Inverse exchange-traded funds (ETFs) are investment vehicles designed to provide returns that move inversely to a specific index or asset. They are popular in 2025 but not all are advisable for purchase. Inverse ETFs use derivatives to allow investors to hedge against downturns or express bearish views without shorting stocks. Their structure makes them unsuitable for long-term strategies due to daily rebalancing, which can lead to performance drift. A small allocation in a diversified portfolio can help manage risk and offset losses during market volatility.
Inverse exchange-traded funds (ETFs) have exploded in popularity in 2025 and are becoming more prevalent. Not every inverse ETF is worth buying, though.
Inverse ETFs are specialized investment vehicles designed to deliver returns that move in the opposite direction of a specific index or asset, typically on a daily basis.
Inverse ETFs are not suited for long-term, buy-and-hold strategies due to daily rebalancing, which can lead to performance drift over time.
By allocating a small portion of their portfolio to inverse ETFs, investors can reduce risk during volatile periods, helping to offset potential losses.
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