The list of top-performing exchange-traded funds since Sept. 19 — the day before the Federal Reserve released new projections that showed fewer rate cuts in 2024 — is dominated by leveraged and leveraged inverse products.
The performance and increased interest shows that the inverse funds are doing their jobs, but there are important caveats for investors to know.
The universe of inverse and leveraged inverse funds has grown widely, including sector-specific funds and even some single-stock products.
Of course, the leveraged inverse funds can suffer massive losses if the market rebounds.
Ullal also pointed out that some inverse products are technically exchange traded notes, not ETFs, which can introduce some credit risk in a trade.
Persons:
Mohit Bajaj, Direxion's TMV, Bajaj, Aniket Ullal, Ullal
Organizations:
Federal Reserve, Bloomberg, Oil ETF, SCO, Nasdaq, Treasury, Treasury Bond ETF, U.S . Securities, Exchange, Bajaj, CFRA Research