Inverse ETFs

Inverse ETFs are one example of antifragile investments because they are designed to increase in value when market prices fall. How have they performed?

Since mid-February, the SPDR S&P 500 ETF (SPY) has cratered 21% while inverse ETFs in the form of the ProShares UltraShort S&P 500 ETF (SDS) and the Direxion Daily S&P 500 Bear 1x Shares (SPDN) have climbed 24.3% and 16.6%, respectively. SDS aims for double daily opposite exposure to the S&P 500 Index whereas SPDN aims for 100% daily opposite exposure to the same yardstick.

Examples inverse etfs: srty, tza, spxs, faz.

Put options are another antifragile tool. Instead of being damaged when market prices collapse, put options thrive and even grow during external shocks. While not all ETFs have an active put options market, many large ETFs do have underlying put options. This feature provides trading flexibility and enables advisors to capitalize on chaos versus being hurt by it.

Volatility linked ETFs are another example of antifragile investments. The ProShares VIX Short-Term Futures ETF (VIXY), for example, has skyrocketed since mid-February as stocks sharply fell. VIXY has surged 220.8% during this period, illustrating how chaos has been beneficial for this fund.