A Bull Market For Bear Funds

Summary

• A bear market demands investors carefully pick the right products, and with only a few options, bear market funds might be the right option for many.
• They offer a potent combination of inverse equity exposure, unique strategies and active management to help investors through the downturn.
• But their high fees and lack of clear benchmarks might be a negative for more active traders.

(Pic Source)

Welcome to the new normal where the first pair of back-to-back 9% days since the Great Depression begins to feel like business as usual. Even then, Friday’s strong uptick couldn’t save equity markets from tipping into the long-awaited bear market and ending the longest-lived bull yet and enter what is likely the first bear market/recession induced by a health crisis. That may be why the mood of the market has clearly been "sell everything at any price" with even safe havens like the SPDR Gold Trust ETF (GLD) and the iShares 20+ Year Treasury Bond ETF (TLT) down 9% and 7.7% last week! Woe unto any asset allocator or dollar cost "averager" in this brave new world!

And we may not have much to contribute to the discussion about how long this bear market might last or how far back the indexes might fall, but we do have something to offer when it comes to talking about products brave investors can use to protect themselves in this situation. Most investors would immediately think of inverse funds, but the ETF marketplace has far more exciting strategies to offer, including “bear market” and other alternative funds for troubled times. We’ve talked about several of these products in other posts, but today we’ll recap some of these strategies to learn what makes them unique and how investors can still profit from the ongoing fallout.

Ahead of the Curve

This isn’t the first time we’ve talked about the alternative options ETF investors have at their disposal beyond the usual number of inverse funds. In our last post on the subject, “HDGE: Strategies To Help You Beat The Bear,” we introduced our readers to the world of inverse funds, specifically the handful that we consider to be bear market products. Those funds, the Ranger Equity

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages. ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision. ETFG’s opinions and analyses do not address the suitability of any security. ETFG does not act as a fiduciary or an investment advisor. While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income.