Stocks were pointed higher in early trading to kick off the holiday shortened week, looking to take back some of the previous week’s losses. “There is not a single reason for the bounce in equities, and the overwhelming view is dismissing the uptick as being nothing more than a dead cat, something that should be faded just like all the other rally attempts lately.” wrote Adam Crisafulli of Vital Knowledge.
The downturn in equity markets has made 2022 a lucrative year for short sellers. A report from investment data firm S3 Partners revealed through May 16th short-sellers had raked in an astonishing $215.6 billion year-to-date in market-to-market profits. In times like this, a short position can reward handsomely. However, for many everyday investors the risks associated with selling stocks are too steep to justify. While a stock can only fall to zero, it can climb infinitely, making the risk of loss on a short sale theoretically unlimited.
Today we’re featuring a unique approach to short-selling that allows investors to take a position that’s inverse to a curated selection of large and mid cap stocks. This approach appeals to many bearish investors who are looking to reap the benefits of a position opposite potential losers, but are looking to mitigate some of the risks by employing a time tested team of pros to do the picking and choosing.
The AdvisorShares Ranger Equity Bear ETF (HDGE) is unlike the majority of products offering short exposure to domestic and international equity markets as it is an actively-managed fund that seeks to identify candidates for short selling based on forensic accounting and other quant-based methodologies.
The fund is making the most of a bad situation, posting positive returns as stocks continue to weaken. So far this year HDGE is up 28.6% while the S&P 500 is down nearly 22%. As an actively managed portfolio of individual components (versus a fund that’s inversely correlated to the market) HDGE offers the unique benefit of a time cushion in the event of a slow recovery, unlike a bear market or inverse fund where a market recovery would likely lead to an immediate loss in value.
The managers behind this fund have an impressive track record and the fund has a wide variety of potential applications depending on an investor’s outlook for the U.S. market. The primary downside of this ETF is the hefty 5.2% expense ratio. The fund’s strategy also involves frequent buying and selling of securities, which may lead to a high portfolio turnover and consequently, may create a drag on returns.
Overall, HDGE enjoys a solid asset base and can be used as an alternative for ‘vanilla’ inverse equity funds. Its unique approach provides a solution for bearish investors who aren’t 100% focused on watching the market.
Should you invest in HDGE right now?
Before you consider buying HDGE, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not HDGE.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
Click here to watch his presentation, and decide for yourself...
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
Click here to find out the name and ticker of Keith's #1 pick...
