45 Best Inverse/Short ETFs by Assets, Volume & Expenses

Inverse ETFs Enable You To Profit In Market Declines. We List & Analyze the Best Short ETFs Based on Net Assets Managed, Liquidity & Expense Ratio

What Are Inverse & Short ETFs?

Inverse or Short ETFs are exchange-traded funds that enable you to bet against (short) a market, sector, or index. Typically, Short ETFs simplify the process of shorting the market and incorporating leverage, as you can simply purchase the ETFs that trade on a live exchange.

Inverse ETFs usually come with built-in leverage of 1x, 2x, or 3x leverage.  If you buy a 3x Inverse ETF on any market day, and the index moves down 1%, you can expect a 3% profit. Conversely, if the market moved up 3% on that day, the 3x leveraged ETF would ensure you incur a loss of 9%.

The Best Short & Inverse ETFs

While there is no single “Best Short/Inverse ETF,” the best ETFs all share the following traits. Firstly, they should have significant assets under management; secondly, they should have large enough trading volume to ensure liquidity; and lastly, they should have low management fees.

This is why our list of the best Short & Inverse ETFs includes the 10-day average trading volumes, the net assets under management, and the expense ratio.

5 Tips on ETFs That Short The Market?

1. Inverse ETFs Should be Traded on a Daily Basis?

All short or inverse ETFs have warnings that they should only be traded on a daily basis. Of course, you can hold them for longer than one day, but you will see mismatches in the return of the short ETF vs. the actual index over time.

Inverse ETFs Do Not Match the Index Performance Because:

  1. The underlying contracts supporting the Inverse ETFs need to be rebalanced at the end of the trading day. This causes slippage.
  2. The effect of the volatility of an index will affect compounding, which affects the inverse ETF. For more information, see this Leveraged ETF FAQ.

2. Inverse ETFs Should Have Good Liquidity & Volume

It is important that if you purchase an Inverse ETF, you can sell it when you want to, for a price that is close to your target price. There are 244 Inverse/Leveraged ETFs on the US exchanges, and the average 10-day trading volume is 1.8 million shares per day. You will want to choose ETFs that average at least 500,000 traded per day.

3. Choose ETFs With Higher Assets Under Management

The median amount of Net Assets under management for leveraged and inverse ETFs is $50 million. It is wise to only utilize ETFs with more than $100 million in assets managed; this helps with liquidity and the fund’s stability.

4. ETFs Should Have Low Expenses

Any Inverse or Leveraged ETF you choose to trade should have lower expense ratios. Of the 244 ETFs in this study, the average expense ratio is 0.96%, but the range of expenses spanned from 1.85% to 0.35%. The largest most liquid funds have an expense ratio between 0.95% and 1.07%, which is acceptable.

5. Use a Commission Free Broker to Minimize Costs

When purchasing ETFs, you should select a broker that enables you to buy and sell ETFs with $0 zero commissions. Firstrade has over 2,200 commission-free ETFs, the largest in the industry. Read the Firstrade Review or visit Firstrade.

The Best Short ETFs / Inverse ETFs List by Assets, Expenses & Volume
The Best Short ETFs / Inverse ETFs List by Assets, Expenses & Volume

Inverse / Short S&P 500 ETFs

Short S&P 500 ETFsTickerNet Assets ($M)Expense RatioLeverage10-Day Volume (Avg)
ProShares Short S&P500SH$2,8640.90%1X10,014,473
ProShares UltraShort S&P500SDS$1,0910.91%2X10,768,469
ProShares UltraPro Short S&P500SPXU$8870.93%3X21,883,476
Direxion Daily S&P 500 Bear 3X SharesSPXS$7361.07%3X30,179,092
Direxion Daily S&P 500 Bear 1X SharesSPDN$1670.50%1X134,750
Direxion Daily S&P 500 High Beta Bear 3X SharesHIBS$451.07%3X1,340,846

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Inverse / Short Nasdaq ETFs

Inverse Nasdaq ETFsTickerNet Assets ($M)Expense RatioLeverage10-Day Volume (Avg)
ProShares UltraPro Short QQQSQQQ$1,5200.95%3X67,453,112
ProShares Short QQQPSQ$7740.95%1X4,373,616
ProShares UltraShort QQQQID$2830.95%2X10,253,212
ProShares UltraShort Nasdaq BiotechnologyBIS$120.95%2X41,206
ProShares UltraPro Short Nasdaq BiotechnologyZBIO$30.95%3X

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Dow Jones Short ETFs

Dow Jones Short ETFsTickerNet Assets ($M)Expense RatioLeverage10-Day Volume (Avg)
ProShares UltraPro Short Dow30SDOW$5160.95%3X6,776,916
ProShares Short Dow30DOG$4080.95%1X665,817
ProShares UltraShort Dow30DXD$1600.95%2X1,453,146
Direxion Daily Dow Jones Internet Bear 3X SharesWEBS$51.07%3X6,395

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Short Russell & Mid Cap ETFs

Short Russell ETFsTickerNet Assets ($M)Expense RatioLeverage10-Day Volume (Avg)
Direxion Daily Small Cap Bear 3X SharesTZA$5261.07%3X13,988,740
ProShares Short Russell2000RWM$4450.95%1X1,056,058
ProShares UltraPro Short Russell2000SRTY$1510.95%3X4,638,339
ProShares UltraShort Russell2000TWM$1140.95%2X1,597,720
ProShares Short MidCap400MYY$320.95%1X31,546
ProShares UltraPro Short MidCap400SMDD$130.95%3X33,262
ProShares Short SmallCap600SBB$120.95%1X3,894
ProShares UltraShort SmallCap600SDD$70.95%2X10,685
Direxion Daily Mid Cap Bear 3X SharesMIDZ$61.08%3X0
ProShares UltraShort MidCap400MZZ$40.95%2X7,170

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Short Oil ETFs

Short Oil ETFsTickerNet Assets ($M)Expense RatioLeverage10-Day Volume (Avg)
ProShares UltraShort Bloomberg Crude OilSCO$800.95%2X2,838,394
Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X SharesDRIP$491.07%2X366,216
MicroSectors U.S. Big Oil Index Inverse ETNsYGRN$310.95%1X267
ProShares UltraShort Oil & GasDUG$210.95%2X63,022

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Short Gold ETFs

Short Gold ETFsTickerNet Assets ($M)Expense RatioLeverage10-Day Volume (Avg)
Direxion Daily Gold Miners Index Bear 2X SharesDUST$1311.07%2X4,581,334
Direxion Daily Junior Gold Miners Index Bear 2X SharesJDST$941.10%2X5,423,593
ProShares UltraShort GoldGLL$271.32%2X35,139
DB Gold Double Short ETNDZZ$60.75%2X5,802
DB Gold Short ETNDGZ$30.75%2X1,863

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Short / Inverse International ETFs

Short International ETFsTickerNet Assets ($M)Expense RatioLeverage10-Day Volume (Avg)
ProShares Short MSCI Emerging MarketsEUM$620.95%1X73,966
Direxion Daily MSCI Real Estate Bear 3X SharesDRV$401.08%3X173,320
Direxion Daily MSCI Emerging Markets Bear 3X SharesEDZ$351.08%3X197,446
ProShares UltraShort MSCI Brazil CappedBZQ$290.95%2X769,465
ProShares Short MSCI EAFEEFZ$280.95%1X15,882
ProShares UltraShort MSCI Emerging MarketsEEV$120.95%2X11,774

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Inverse ETF Performance vs. The S&P 500

The long-term performance of inverse ETFs does not match the performance of the underlying index. In this example, you can see a 1-year chart of the S&P 500 versus the ProShares UltraShort 2X Inverse leveraged ETF. This is the chart spanning the Corona Virus Crash in March 2020.

Inverse/Short ETF Performance vs S&P 500 Index 1-Year 2020
Inverse/Short ETF Performance vs. S&P 500 Index 1-Year 2020 (ProShares UltraShort – Ticker SDS) (Courtesy Stock Rover)

1 Year 2X Inverse ETF vs. S&P 500 Performance.

  • The S&P 500 Index gained 13%
  • The ProShares UltraShort 2X lost 46%

From October 25, 2019, to October 25, 2020, the 2X Short ETF made a loss of 3 times that of the gain in the S&P 500. This is much more than the expected 2X loss.

1 Month 2X Inverse ETF vs. S&P 500 Performance.

  • The S&P 500 Index lost 33%
  • The ProShares UltraShort 2X gained 89%

From February 18, 2020, to March 23, 2020 (the exact period of the stock market crash), the 2X Short ETF made a gain of 3 times that of the loss in the S&P 500. This is much more than the expected 2X gain.

Inverse ETF Summary

Timing is crucial when trading Inverse ETFs. The chart above highlights that you cannot expect the 2X or 3X leverage to hold true in the longer-term.  But in the short-term, inverse ETFs are a great way to hedge your bets or bet against the market.

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