How To Short The Global Economy Without Becoming A Short-Seller

Wondering how to profit from a declining market without becoming a short seller?

Motif Investing constantly looks for “trends, ideas and world events that could create an investment opportunity,” and then picks 10 to 30 related stocks to build portfolios around, weighing them based on their exposure to the coinciding idea, event or trend.

This article will look into a portfolio “designed to track two times the inverse performance of the broader international stock market, by utilizing inverse leveraged country-specific ETFs.”

The Bear International Market & Leveraged ETFs

The people behind the motif explain that leveraged ETFs are conceived to reach their investment objective “on a daily basis and may not track an underlying index over an extended period of time.”

They warn, however that “ETFs with Leveraged and Inverse strategies can accelerate the risk and volatility of an investment beyond that of a traditional ETF strategy.” So, people who decide to invest in theBear International Market motif should be aware of the unique risks involved.

Each Leveraged/Inverse ETF in the portfolio tracks a different investment objective and strategy. So, the people responsible for the portfolio recommend reviewing each ETF's prospectus (objective and strategy) carefully before investing. Moreover, they advise investors to “monitor closely the volatility of each ETF in the motif closely to determine how activity in the marketplace may be impacting the performance of the individual ETFs in portfolio as well as the overall performance of the motif.”

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“Leveraged/Inverse ETFs may not be suitable for investors who plan to hold positions for longer than one trading session or who may not fully understand the impact of daily compounding of leveraged investment returns, and who may not actively monitor their positions throughout the trading day,” they conclude.

Performance And Allocation

Over the past year, this Bear International Market motif has widely outperformed the market, delivering a 54.6 percent return, mainly driven by the 26.6 percent surge it experienced over the last month.

Source: Motif Investing

The portfolio allocates its assets to four US-listed ETFs “that track the inverse performance of relevant countries and regions within the global stock market.” Allocation goes as follows:

• Brazil
• ProShares UltraShort MSCI Brazil Capped BZQ – 29.9 percent
• China
• ProShares UltraShort FTSE China 50 FXP – 27.9 percent
• Emerging Markets
• ProShares UltraShrt Mrkt (ETF) EEV – 25.5 percent
• Europe
• ProShares UltraShort FTSE Europe ETF EPV – 16.7 percent