An Easier Way to Short Emerging Markets

"It's very difficult to put in short positions in emerging markets, so these ETFs will make it much easier to hedge," says Peter Schiff, president of Euro Pacific Capital, a Darien, Conn., brokerage, and author of Crash Proof: How to Profit in the Coming Economic Collapse.

He adds that making hedging easier is actually a bullish move for the emerging markets. That's because it lowers the investment's risk, making it more attractive. The ETFs offer insurance on the market going lower. Once there is a way to protect against declines, people should be more willing to take the risk of going long, which will push the market higher.

"I'm more interested in buying the pullbacks in emerging markets than going short," Schiff says.

Investors short stocks and futures when they think the market will go lower. Typically, when an investor shorts an individual stock he needs to set up a margin account, then borrow the shares in order to sell them. The short seller profits if the market falls so he can buy the shares to repay the loan at a lower price.

ProShares describes its products as ETFs that go up when the market goes down. Out of its family of 54 ETFs, 29 short the U.S. market. And of the 29 U.S. shorts, 22 are double shorts, giving twice the inverse move of the market.