Q: Hi,
I'm a conservative, almost 60yr old inverter who, last Friday, panicked and shifted about half of my portfolio into ETF bonds as a safer haven for now due to Trump's global tariff mayhem. Now, of course, I'm considering the unthinkable - Canadian inverse bear ETF's to try to get some money back from the crash. I may never have the nerve to do such a thing since I realize there is a high-risk gamble, no dividend and high fees involved. Is there anything else I should be aware of before I dip my toe into such extreme ETF's ?? Is it better to stay in CAD or shift to USD ?
Thanks - Nick
I'm a conservative, almost 60yr old inverter who, last Friday, panicked and shifted about half of my portfolio into ETF bonds as a safer haven for now due to Trump's global tariff mayhem. Now, of course, I'm considering the unthinkable - Canadian inverse bear ETF's to try to get some money back from the crash. I may never have the nerve to do such a thing since I realize there is a high-risk gamble, no dividend and high fees involved. Is there anything else I should be aware of before I dip my toe into such extreme ETF's ?? Is it better to stay in CAD or shift to USD ?
Thanks - Nick
5i Research Answer:
In addition to the points mentioned, 2X ETFs use derivatives which are reset daily, and this results in a natural, daily, net asset value decay. Trading liquidity can also be weak. SPXD is up 32.7% this year with the market decline. Another concern is that such an ETF may not even hedge what an investor owns properly. SPXD focused on the S&P 500, which may be very different than what a Canadian investor owns. We would not suggest leveraged ETFs. For the Canada/US question, investors will find that any Canadian based product is too small and illiquid. Most have in fact closed. If an investor wants to hedge, we would prefer a single ETF such as SH for the S&P. It is more of a hedge and less of a lottery ticket as leveraged ETFs are.