Can inverse ETFs make a profit during a bear market?

During these times, the majority of investors who have a long-only bias in their portfolio will have to endure volatility and unrealized losses. However, investors still have a variety of means when it comes to making a profit during a bear market. One of these tools is the inverse exchange-traded fund, or inverse ETF.

What is a leveraged ETF?

Leveraged ETFs are intended for short-term, intraday trading, and positions are closed out at the end of each day; this means liquidity is of vital importance. Assets under management of at least $200 million. We omitted any funds with less than $200 million of net assets. Expense ratios below 1.25%.

What is a leveraged inverse ETF?

"Leveraged inverse ETFs differ from regular inverse ETFs in that they seek to provide a multiple of the inverse daily performance of the underlying benchmark," Diener says. An example of a leveraged inverse ETF would be QID, which targets a daily inverse return two times that of the Nasdaq 100 index for a 0.95% expense ratio.