Inverse ETFs Gain Acceptance in Market Rout

The blood bath in the stock market has thrust inverse ETFs into the spotlight.

Only 61 of the 839 exchange-traded funds tracked by Morningstar have produced gains this year. The top 25 ETFs are all inverse funds, which move in the opposite direction of their underlying indices.

The growing popularity of these instruments was underscored when Direxion Shares launched a class of inverse ETFs that seek to achieve 300% of the daily performance of the four Russell indices they use as benchmarks. They are the Large-Cap Bear 3x Shares(BGZ Quote), Small-Cap Bear 3x Shares(TZA Quote), Energy Bear 3x Shares(ERY Quote) and Financial Bear 3x Shares(FAZ Quote). Direxion Shares also started four "bull" ETFs, which aim to return investors 300% of their underlying indices. ...