Bet Against the Market Using These ETFs

Generally, it’s a fool’s game to bet against stock markets. After all, the economy tends to keep on growing and stocks have consistently gone up over the last century.

But that’s not always the case. Every now and again, stocks move lower. There might be a recession, natural disaster, credit crisis, or any number of calamities that impact the market.

Betting on that move lower is a tough way to make money, but it’s certainly not impossible. There are a number of ETFs that can help.

The Horizons BetaPro S&P/TSX 60 Bear ETF (TSX:HXD) is a levered inverse ETF that will increase if the underlying index goes down and decrease if the index increases. It’s double leveraged, which means if the TSX 60 falls by 1%, the ETF will increase by 2%.

The ETF is rebalanced daily, making it most suitable for shorter-term trades rather than as a staple in your portfolio.

Naturally, this ETF hasn’t done well in the last five years, thanks to relative strength in Canadian stocks. It’s down nearly 19%. In addition, the ETF charges a rather high management fee of 1.15%, but keep in mind it performs a specialized service.

Horizons has other inverse ETFs that offer a leveraged bet against other sectors like gold, oil, natural gas, financials, and global mining stocks.

Another popular Horizon daily bear ETF is the one that bets against the S&P 500. The Horizons BetaPro S&P 500 Bear ETF (TSX:HSD) trades more than 200,000 shares on an average day despite only having a market cap of just over $57 million.