Inverse or 'Short' Exchange Traded Funds

Hi Freetrade Team,

Is it possible that we start to add some inverse or ‘short’ ETFs?

I realise this may be confusing to some newer investors but with a decent description (and a warning) and maybe a link to a blog post the Freetrade team might like to post… I think it could be a nice addition to the platform.

Sometime in the future I anticipate short selling and options and so on will be available via Freetrade but along with that and as a start how about adding some inverse ETFs?

Whatdya think?

Thanks,

They’ve said no to short selling and options, as it’s supposed to be an investment platform not a trading platform.

However personally I can’t see any problem with inverse ETFs. You can bet against the market with these without the potential to lose more than you put in

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Thanks Dave I wasn’t aware of that.

My thinking exactly, there’s no need for margin here. The funds themselves are often leveraged though so one would still have to be sure about what they’re doing else you’re waking up the next day with a green market and huge losses.

I suggested a few inverse index (US & UK) ETF’s a few months ago. Feel free to find them within the suggested new shares section and to vote for them.

The more votes that these get, the more chance that they will get added. :slight_smile:

Matt

I can’t see why they shouldn’t be added to Freetrade, given they’re not the same as futures or options. Nowadays during the Covid outbreak they would be a reasonable choice for many investors, and would help Freetrade to keep those transactions flowing even in times of great uncertainty. For those unfamiliar with the concept of inverse ETFs, here is a simple explanation.

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Hi Dave, I got your point of view.
In some cases, Short/Inverse ETF/ETP can be a good tool to cover a specific risk during a specific timeframe. For Example: I own many ESG ETF (as I am an ESG Fan), but many of these ESG ETF have a too big exposure on Tesla or Nio… buying some EV Short ETF allow me to reduce the exposure on it.
CFD allow it too, but it is too expensive and need to open additional CFD account :confused:
and Inverse ETF are not margin based product, so I cannot lose more than the amount I put in it!

There is already an inverse of the S&P 500 on Freetrade - £XSPS

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Is there any way for normal people/cows to get in on the action? I don’t see myself as betting against the UK, more as betting that the current regime will continue to be economically irresponsible and fiscally illiterate.

I don’t fancy currency trading directly, I’m just wondering if there are any funds or ETFs that offer an easier route.

crypto exchanges seems to be the easiest way to trade yen, pound, dollar and auz dollar (kraken)

just trade currency pairs @CashCow

Just buy ETFs with foreign companies. Voila, no need to trade currency directly.

Spreadbetting firms let you trade forex. it’s risky though.

Provide some instruments for customers to profit from when the mark dips or is due to dip, preferably with fractional investment.

Not necessarily requesting geared products.

I use trading 212 CFDs for this. Using it as my leverage in case market drops again.

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Hi all,

I’ve been using the S&P and FTSE inverse ETFs on Freetrade to hedge against volatility and market downturns.

Anyone else doing the same?

I know there is a Freetrade page on the risks but it’s a bit vague. What are the actual risks other than just the usual stuff that your capital is at risk?

Thanks

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I mean if you held it for 50 years, it might go close to zero (proportionally). But I hope you’re also holding some longs so its not that bad.

Other negative instruments such as options trading or like the 3xShort ETFs could see you wiped out or in negative (in US) but on the normal 1x negative it’s more just a slight risk of losing a few % in a normal year

Unless Donald wins again, in which case it will go up 50% then down 300% presumably.

yeah, I am. probs for a year or more looking at this market…

XSPS great for hedging US investments that you don’t want to sell (because the FX fee will cost you - but there’s no cost to trade the inverse S&P ETF).

If there’s a particularly bad day it can be a useful daily hedging tool to limit loss on US investments.

Plus, right now with the S&P nosediving, you can make some good returns.

I’d like to see Freetrade include a VIX ETF

Currently there’s no way of hedging downside risk via options or short stock sales. Can we add some inverse ETF index tickers?

I think the problem here is that inverse ETFs empirically do not deliver over a long time period and so require constant monitoring and awareness of the markets.

Given the relatively low liquidity of inverse ETFs and the limited time scale over which a holding is useful it does not not really seem in keeping with the Freetrade vision for these to be added.