41 Best Inverse ETFs (Short ETFs \/ Bear ETFs) (2024)

$41 Best Inverse ETFs (Short ETFs \/ Bear ETFs) (1)$

Written by Blain Reinkensmeyer
Edited by Carolyn Kimball
Fact-checked by Steven Hatzakis

October 16, 2023

When you invest in the stock market, you can bet on both sides of the market using an online broker account. Inverse ETFs (exchange traded funds) are an easy way to place bearish bets without physically shorting shares of stock.

Bottom line, the following ETFs go up in value as the underlying benchmark index they track goes down. See also: List of Long ETFs (Bullish ETFs).

Inverse / Short S&P 500 ETFs (1x, 2x, 3x)

ETF NAME	TICKER	LEVERAGE	BENCHMARK INDEX
Short S&P 500	SH	1x	S&P 500
Short Mid Cap 400	MYY	1x	S&P Mid Cap 400
Short Small Cap 600	SBB	1x	S&P Small Cap 600
UltraShort S&P 500	SDS	2x	S&P 500
UltraShort Mid Cap 400	MZZ	2x	S&P Mid Cap 400
UltraShort Small Cap 600	SDD	2x	S&P Small Cap 600
UltraPro Short S&P 500	SPXU	3x	S&P 500
Direxion S&P 500 Bear 3x	SPXS	3x	S&P 500 Index
Direxion Mid Cap Bear 3x	MIDZ	3x	S&P Mid Cap 400 Index
UltraPro Short Mid Cap 400	SMDD	3x	S&P Mid Cap 400

Inverse / Short NASDAQ ETFs (1x, 2x, 3x)

ETF NAME	TICKER	LEVERAGE	BENCHMARK INDEX
Short QQQ	PSQ	1x	Nasdaq 100
UltraShort QQQ	QID	2x	Nasdaq 100
UltraPro Short QQQ	SQQQ	3x	Nasdaq 100

Inverse / Short Russell 2000 ETFs (1x, 2x, 3x)

ETF NAME	TICKER	LEVERAGE	BENCHMARK INDEX
Short Russell 2000	RWM	1x	Russell 2000
UltraShort Russell 2000	TWM	2x	Russell 2000
UltraPro Short Russell 2000	SRTY	3x	Russell 2000
Direxion Small Cap Bear 3x	TZA	3x	Russell 2000
UltraShort Russell 1000 Value	SJF	2x	Russell 1000 Value
Direxion Financial Bear 3x	FAZ	3x	Russell 1000 Financial Services
UltraShort Russell 1000 Growth	SFK	2x	Russell 1000 Growth
UltraShort Russell Mid Cap Value	SJL	2x	Russell Mid Cap Value
UltraShort Russell Mid Cap Growth	SDK	2x	Russell Mid Cap Growth
UltraShort Russell 2000 Value	SJH	2x	Russell 2000 Value
UltraShort Russell 2000 Growth	SKK	2x	Russell 2000 Growth

Inverse / Short Dow Jones ETFs (1x, 2x, 3x)

ETF NAME	TICKER	LEVERAGE	BENCHMARK INDEX
Short Dow 30	DOG	1x	Dow Jones Industrial Average
UltraShort Dow 30	DXD	2x	Dow Jones Industrial Average
UltraPro Short Dow 30	SDOW	3x	Dow Jones Industrial Average
UltraShort Basic Materials	SMN	2x	Dow Jones U.S. Basic Materials
UltraShort Consumer Goods	SZK	2x	Dow Jones U.S. Consumer Goods
UltraShort Consumer Services	SCC	2x	Dow Jones U.S. Consumer Services
UltraShort Financials	SKF	2x	Dow Jones U.S. Financials
UltraShort Health Care	RXD	2x	Dow Jones U.S. Health Care
UltraShort Industrials	SIJ	2x	Dow Jones U.S. Industrials
UltraShort Real Estate	SRS	2x	Dow Jones U.S. Real Estate
UltraShort Semiconductors	SSG	2x	Dow Jones U.S. Semiconductors
UltraShort Oil & Gas	DUG	2x	Dow Jones U.S. Oil & Gas
UltraShort Technology	REW	2x	Dow Jones U.S. Technology
UltraShort Utilities	SDP	2x	Dow Jones U.S. Utilities

Inverse / Short Emerging Markets ETFs (1x, 2x, 3x)

ETF NAME	TICKER	LEVERAGE	BENCHMARK INDEX
Short MSCI Emerging Markets	EUM	1x	MSCI Emerging Markets Index
UltraShort MSCI Emerging Markets	EEV	2x	MSCI Emerging Markets Index
Direxion Emerging Markets Bear 3x	EDZ	3x	MSCI Emerging Markets Index

Trading and researching ETFs

To compare online brokers for trading ETFs, read our online broker guide and use the StockBrokers.com comparison tool. I recommend Fidelity which has the best ETF research tools (ETF screeners, charting, third-party reports, etc) and overall experience for ETFs.

» Want to know more? Read our quick takes on ETFs and mutual funds.

Know what's in your ETF and how the ETF is calculated

One of the Fast Money guys mentioned the UltraShort Oil & Gas ProShares ETF (DUG) on a recent show. He questioned how that ETF, which is the double inverse of oil & gas could be up for the day while oil was also up. A quick look at what DUG actually is gives the answer:

UltraShort Oil & Gas ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Oil & Gas Index^SM

That "daily" part adds one complication to the picture. From the article "Understanding ProShares' Long-Term Performance" on ProShares' site:

ProShares are designed to provide either 200%, -200% or -100% of index performance on a daily basis (before fees and expenses).
A common misconception is that ProShares should also provide 200%, -200% or -100% of index performance over longer periods, such as a week, month or year. However, ProShares' returns may be greater than or less than what you'd expect over longer periods.

The article goes on to explain how & why this happens. But the question about how DUG could be up while the price of oil was also up is answered by looking at what comprises DUG -- the Dow Jones U.S. Oil & Gas Index. That index "measures the performance of the energy sector of the U.S. equity market. Component companies include oil drilling equipment and services, coal, oil companies-major, oil companies-secondary, pipelines, liquid, solid or gaseous fossil fuel producers and service companies."

Note that the actual price of oil is not mentioned. When you look at how that index is constructed you'll see that ExxonMobil Corp. (XOM) makes up 28%, Chevron Corp. is 11% and ConocoPhillips is 7%. So at least 46% of the index is big oil companies (major integrated oil & gas). Then the question is how does the price of oil relate to movements in those oil companies? Or more broadly, how do ETFs compare against the underlying over longer periods of time?

Below we've plotted oil ($WTIC) vs. the ETF tracking oil (USO) over 2008 - 2018.

$41 Best Inverse ETFs (Short ETFs \/ Bear ETFs) (2)$

This shows that the price of oil has seriously outperformed the ETF, USO. Bottom line, be careful with which ETFs you are holding long.For more on this topic, ETFDB has a good post, 7 Risks of Trading Leveraged ETFs and How to Avoid Them.

What is an inverse ETF?

An inverse exchange-traded fund, or inverse ETF, moves in the opposite direction of a specified investment or index. Investors who cannot short securities because of account restrictions, liquidity, or inability to find stock to short can still take a bearish position by buying an inverse ETF.

How does an inverse ETF work?

Inverse ETFs are managed to generate the exact opposite return of a specific investment or index for a specified period, typically a day. For example, the expected one-day return of a portfolio invested 50% into an S&P 500 index fund and 50% into an inverse S&P 500 index fund should be zero.

What is an inverse ETF for Dow Jones?

ProShares offers three ETFs that are managed to provide returns that perform in the opposite direction of the Dow Jones Industrial Average. The ProShares Short Dow 30 (DOG) targets unlevered inverse daily returns, while the ProShares UltraShort Dow 30 (DXD) is managed to generate two times the inverse daily returns, and the ProShares UltraPro Short (SDOW) seeks to return three times the inverse daily returns of the Dow Jones Index.

Are short ETFs safe?

Short ETFs, otherwise known as inverse ETFs, use complicated financial derivatives to achieve their investment objectives. They are best suited for sophisticated traders or long-term investors seeking to temporarily hedge long-term positions. Derivative users (both managers and investors) have occasionally made errors that led to catastrophic losses.

Can you short a 3X leveraged ETF?

You may be able to short a 3X leveraged ETF if you can borrow the shares, but the real question is why you would want to. It is likely easier to buy another ETF that accomplishes the same purpose. Though you may be able to make occasional short-term arbitrage profits, they will be slim and difficult to capture consistently unless you have institutional-quality IT infrastructure.