In December 2012, popular UtraShort ETFs were ProShares Barclays 20+ Year Treasury and ProShares S&P 500, reports Zachs Equity Research Service. Both ETFs seek returns at 200 percent of the inverse of the daily performance of the underlying index. Direxion Daily Small Cap Bear 3X strives for an inverse return of 300 percent.
The Proshares Barclays 20+ ETF tracks the daily performance of Barclays 20+ Year Treasury Bond Index. In 2012, it held $3 billion under management, invested in 19 securities that included AAA-rated bonds. It is a high-risk, high-reward investment that requires daily portfolio tracking, according to Zachs.
Another popular UltraShort ETF that provides a hedge of twice the inverse rate was the ProShares S&P 500, notes Zachs. With $1.9 billion of assets under management in 2012, the ETF held 500 securities. Approximately 90 percent were concentrated in large-cap firms, including Apple, ExxonMobil and General Electric.
Direcion Daily is an UltraShort ETF for the small-cap market. It tracks the Russell 200 Index. In 2012, it had $780 million of assets under management. It is the best bearish strategy for the small-cap market while using leverage, indicates Zachs.
The UltraShort ETFs use swaps, futures contracts and other derivatives for opposite exposure to the performance of the underlying index, as the site explains.