Short Mutual Funds, ETFs Clean Up

No matter how tortured the investment environment becomes, there is always a bull market to be found somewhere if you look really, really hard. This week the stampede of winning funds was made up of those that play the short side of the market.

As fear of a U.S. recession spread across the country and around the world, the Dow Jones Industrial Average slipped 5.4%, the S&P 500 gave up 6.1% and the Nasdaq 100 lost 5.7% for the week ended Jan. 17.

Meanwhile, the average inverse fund we track gained 11.46%. An aggregate score that high is a result of the leverage employed by many of these inverse funds.

Never before have we produced a best-performing list with such large, across-the-board gains. One-week returns like these would make a respectable year. Topping the list is UltraShort FTSE/Xinhua China 25 ProShares (FXP Quote), a new exchange-traded fund that bets against Hong Kong and mainland Chinese stocks with 200% leverage. It returned 38.4%. ...