Objective

The Bear Market 2X folio was developed for sophisticated contrarian investors seeking aggressive short-term growth with high downside risk and volatility.

Strategy

The Bear Market 2X folio consists of ETFs that are designed to be negatively or inversely correlated with the overall market performance of the indices they are compared to on a daily basis.

As economic cycles run their course of expansion and contraction, this folio can provide a short-term hedge during market downturns or periods of significant volatility. This folio can also be used if your other assets are exposed to the movements (or volatility) of the broader market and you want to reduce risk while retaining those other assets. This folio should not be used as part of a long-term strategy.

Because this folio is designed to perform inversely relative to the market on a daily basis, it can be very volatile and could suffer substantial losses. For example, if the market increases 1% on a given day, the folio is designed to decrease 2% on that same day and vice versa for market decreases.

Additionally, because the weighting of the securities used in the ETFs that comprise this folio are usually reset daily by the issuers of the ETFs to take into account changes in the market, the performance of these ETFs deviates over longer periods from what might otherwise be expected. Consequently, this folio is best used for a short-term hedge or position, as opposed to use as part of a long-term strategy.

The Bear Market 2X folio inversely correlates to 2 times the daily performance of its corresponding index. Due to the compounding of daily returns, returns over periods greater than 1 day will likely differ in amount and possibly direction from the target return for the same period. Consequently, assets invested in leveraged ETFs should be monitored daily at a minimum. For more information, please click here.

Note: Inverse and leveraged ETFs are complicated instruments that should only be used by investors who understand and are comfortable with the ETF’s terms, investment objectives, risks, distribution of any gains, tax consequences, fees and expenses. The ETF may include features designed to achieve the fund’s investment objectives on a daily basis, which can make an underlying index or reference over a longer period of time by the fund untraceable. Folio makes available most exchange-traded ETFs for use by advisors and clients but does not recommend any securities or strategies. According to FINRA, leveraged ETFs typically are not suitable for retail investors who plan to hold them for more than 1 trading session, particularly in volatile markets. Carefully review the applicable prospectus for each ETF by visiting the fund-specific website before investing in inverse or leveraged ETFs.

Learn about the additional risks of inverse and leveraged ETFs by clicking on the link.

Last Updated: December 2, 2016

Category: Strategy
Inception Date: 2008-02-21 00:00:00.0
Date Funded: 2009-08-31*

Folio S&P 500 Total Return
One-Month -12.86% 4.75%
Three-Month -6.01% 1.09%
Year-to-Date -25.62% 9.44%
One-Year -21.98% 7.71%
Three-Year (Annualized) -21.57% 9.05%
Five-Year (Annualized) -28.73% 14.41%
Since Inception -28.41% N/A
Volatility 29.73% 13.86%

Past performance is no guarantee of future results.
See how returns are calculated

* Returns reflect model performance from the Inception Date to the Date Funded, and funded performance since the Date Funded, if funded. Your returns may deviate significantly from the values displayed here, due to many factors, including how long after a strategy has been updated that you place orders to update your holdings.

#SymbolCompanyWeight
(% of Folio)
1DXDproshares ultrashort dow 3020.00%
2MZZproshares ultrashort midcap 40020.00%
3QIDproshares tr ultshrt qqq20.00%
4SDSproshares ultrashort s&p 50020.00%
5TWMproshares ultrashort russell200020.00%

Steps to Create This Folio

  1. We combined a series of inverse ETFs to create a folio which typically generates positive daily returns when the U.S. stock indices have negative daily returns and vice versa.
  2. The ETF allocations are constrained to result in a folio with a Beta of -2.0 with respect to the Beta of the S&P 500.

Number of Securities

The number of securities in this folio may vary.

Update Frequency

Quarterly.

If the characteristics of the folio have changed substantially, the securities included may change. Also, corporate actions, such as a merger, or other events may cause changes to the securities held at any time. Your returns may deviate significantly from the values displayed here, due to many factors, including how long after a folio has been updated that you place orders to update your holdings.