5 Popular Bear Market Funds in the USA
Many pro investors invest in bear funds to hedge against falling prices in the bear market and also make profits. Some of the most popular bear funds that have established their names in the market include PIMCO Stocks PLUS Short Institutional and Federated Prudent Bear A. Both of these funds try to provide their investors with enough hedging opportunities against potential loss in the falling markets and also a way to make money during market downturns.
Grizzly Short is an aggressive bear fund that heavily depends on a short-selling strategy. Rydex Inverse S&P 500 Strategy fund is another popular bear fund that provides you with a return that is inversely related to the S&P 500.
Gotham Short Strategies Institutional is yet another fund that resorts to a short-only investment strategy to help its investors capitalise on market declines.
1. PIMCO StocksPLUS Short Fund Institutional Class
If you are looking for a fund that will help you edge against or benefit from a potential downturn in stocks, PIMCO Stocks PLUS Short Institutional fund (PSTIX) is definitely one of the most popular bear funds available.
With the objective of having an NAV value that is inversely proportional to the value of the S&P 500 Index, PSTIX invests in short positions against the S&P 500 Index. You can gain an inverse exposure to the S&P 500 index, helping you make money when the index falls. The total asset value of this fund is around US$121.2 million and its expense ratio is 0.720%.
2. Federated Hermes Prudent Bear Fund Class A Shares
The Federated Hermes Prudent Bear Fund Class A Shares (BEARX) is yet another specialised fund for investment that provides you with profits by adopting a short-selling strategy. This is perfect for investors looking for funds that have a high-risk, high-reward profile. Always check your risk tolerance level as well as investment horizon before investing in a bear fund that heavily depends on short-selling.
Also Read: Three Bear Market Mutual Funds
3. Grizzly Short (GRZZX)
The Grizzly Short Fund (GRZZX), managed by Leuthold Weeden Capital Management LLC, is a specialised bear fund that operates in various sectors of the US public equity market. One of the most unique aspects of this fund is that it employs a proprietary model for stock identification that is most likely to underperform or depreciate.
One of the best things about GRZZX is that it removes emotional biases and provides you with disciplined investment decisions. This fund has taken significant positions across diversified sectors including consumer discretionary, materials, and industrials.
4. Rydex Inverse S&P 500 Strategy Inv (RYURX)
The Rydex Inverse S&P 500 Strategy Fund Investor (RYURX) is a renowned bear fund that hedges investors against market downturns. This mutual fund tracks the performance of the S&P 500 Index inversely. If the index moves downwards, the value of the RYURX fund increases and vice versa.
To achieve its objective, the fund uses derivatives and other financial instruments. This counterbalances your exposure to traditional equity. Just like any other bear fund, inverse funds like Rydex Inverse S&P 500 Strategy Fund Investor have higher risk but higher profit potential. So, before taking the plunge, assess your financial needs, investment horizons, and risk profile.
5. Gotham Short Strategies Institutional
The Gotham Short Strategies Institutional (GSSFX) is another popular bear fund that specialises in short-selling and makes a profit by anticipating a fall in stock prices. The USP of this fund is its research-driven approach of identifying overvalued stocks and then taking short positions.
This fund is meant especially for institutional investors, who are looking for investment vehicles that can hedge their risk of investment in a bear market. As this bear fund is also based on short-selling stocks, you can make a huge profit. However, you should also be aware of the fact that it may also lead to huge losses. So, you should make a proper assessment before taking the leap.
Also Read: A Guide to Investing in Bear Market Funds
