Strategy 3. Use Tactical Short Term Shorts
Tactical shorts such as Direxion Daily S&P 500 Bear 1X Shares ETF (SPDN) can reorient a portfolio’s risk exposures quickly without unwinding existing long positions. Such shorts seek investment returns, before fees and expenses, of 100% or more of the inverse of the performance of the S&P 500 Index or other market indexes for a single day.
For many investors, a more tactical short-term hedge is an attractive tool when facing a more volatile market environment. Investors with long-term conviction in their equity holdings but equally strong short-term concerns can tactically add short exposure in order to gain when markets decline.
It is important to note that such funds should not be expected to provide 100% of the inverse of the benchmark’s cumulative returns for periods longer than one day. And investors should understand the risks associated with the use of shorting and are willing to monitor their portfolios frequently.