10 Best Funds for Bear Markets

NEW YORK ( TheStreet Ratings) -- TheStreet.com Ratings reviews the risk-adjusted return performance of around 25,000 funds every month. With our economy on the mend and corporate profits on the up-swing, a bear market for most domestic stocks is not a good bet.

However, our list of the best bear market funds highlights other places where downside gains can still be made. Of course, none of the following inverse funds are appropriate for long-term holdings and should never account for more than a small hedge position within an overall diversified portfolio.

The following funds present compelling vehicles for short-term speculation where, due to recent weakness, bear markets may exist.

Here are the 10 best bear market funds for 2012:

-----------------------------

10. Direxion Daily Russia Bear 3x Shares

Direxion Daily Russia Bear 3x Shares ( RUSS) seeks daily investment results of 300 percent of the inverse of the price performance of the DAX Global Russia Index. The fund invests at least 80 percent of its net asset in future contracts, options on securities, equity caps, collars and floors, swap agreement, and other financial instrument.

Expense Ratio: 0.95%

Load: 0.00%

Unrated by TheStreet Ratings:

-----------------------------

9. PIMCO CommoditiesPLUS Short Strategy Fund

PIMCO CommoditiesPLUS Short Strategy Fund ( PCCAX) seeks total return which exceeds that of the inverse return of its benchmark. The fund seeks to achieve its investment objective by investing under normal circumstances in short positions with respect to the Dow Jones UBS Commodity Index Total Return including commodity-linked derivative instruments.

Expense Ratio: 1.29%

Load: 5.50%

Unrated by TheStreet Ratings:

-----------------------------

8. ProFunds Short Precious Metals ProFund

ProFunds Short Precious Metals ProFund ( SPPIX) invests in financial instruments that, in combination, are expected to have similar daily return characteristics as the inverse of the Dow Jones Precious Metals Index. The fund invests at least 80% of its assets in financial instruments with these economic characteristics.

Expense Ratio: 1.73%

Load: 0.00%

Rated "E-" by TheStreet Ratings:

-----------------------------

7. ProFunds Ultra Short Japan ProFund

ProFunds Ultra Short Japan ProFund ( UKPSX) seeks daily investment results before fees and expenses that correspond to twice the inverse of daily performance of the Nikkei 225 Stock Average. The fund invests in equity securities and or financial instruments that in combination should have similar daily return characteristics as twice the inverse of the daily performance of the Nikkei 225 Stock Average. The fund invests at least 80 percent of its assets to equity securities of Japanese companies and or financial instruments with similar economic characteristics.

Expense Ratio: 2.73%

Load: 0.00%

Rated "E-" by TheStreet Ratings:

-----------------------------

6. ProShares Short Financials

ProShares Short Financials ( SEF) seeks daily investment results before fees and expenses that correspond to the inverse of the daily performance of the Dow Jones U.S. Financials Index. The fund may invest 80% of its assets to investments that in combination having economic characteristics that are inversely related to those of the index.

Expense Ratio: 0.95%

Load: 0.00%

Rated "E+" by TheStreet Ratings:

-----------------------------

5. ProShares Short MSCI Emerging Markets

ProShares Short MSCI Emerging Markets ( EUM) seeks the investment results before fees and expenses that correspond to the inverse of the daily performance of the MSCI Emerging Markets Index. The fund may invest at least 80 percent of its assets in combination have economic characteristics that are inverse to those of the Index.

Expense Ratio: 0.95%

Load: 0.00%

Rated "E+" by TheStreet Ratings:

----------------------------

4. ProShares Short Basic Materials

ProShares Short Basic Materials ( SBM) seeks daily investment results before fees and expenses that correspond to the inverse of the daily performance of the Dow Jones U.S. Basic Materials Index. The index measures the performance of the basic materials industry of the U.S. equity market. Component companies are involved in the production of aluminum, steel, non-ferrous metals, commodity chemicals, specialty chemicals, forest products, paper products, as well as the mining of precious metals and coal.

Expense Ratio: 0.95%

Load: 0.00%

Rated "D-" by TheStreet Ratings:

-----------------------------

3. ProShares UltraShort MSCI Brazil

ProShares UltraShort MSCI Brazil ( BZQ) seeks daily investment results, before fees and expenses that correspond to twice 200 percent the inverse of the daily performance of the MSCI Brazil Index. The fund may invest at least 80% of its net assets including borrowings to investments that in combination have matching economic characteristics.

Expense Ratio: 0.95%

Load: 0.00%

Rated "D-" by TheStreet Ratings:

-----------------------------

2. ProShares UltraShort Euro

ProShares UltraShort Euro ( EUO) seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the U.S. Dollar price of the Euro. There is always a bear market in the currency markets as one currency must fall in order for the currency it is measured against to rise.

Expense Ratio: 0.95%

Load: 0.00%

Rated "D" by TheStreet Ratings:

-----------------------------

1. Direxion Daily India Bear 3x Shares

Direxion Daily India Bear 3x Shares ( INDZ) seeks daily investment results, before fees and expenses, of 200 percent of the inverse of the price performance of the Indus India Index. The fund does not invest in equity securities. The fund may invest at least 80 percent of its net assets in futures contracts, options on securities, indices and futures contracts, equity caps, collars and floors, swap agreements, forward contracts, short positions, and reverse repurchase agreements.

Expense Ratio: 0.95%

Load: 0.00%

Rated "C" by TheStreet Ratings:

-----------------------------

How We Rate Funds

TheStreet Ratings condenses the available fund performance and risk data, including penalties for load charges, into a single composite opinion of each fund's risk-adjusted performance. This allows the unbiased identification of those funds that have historically done well and those that have underperformed the market. While there is no guarantee of future performance, these investment ratings provide a solid framework for making informed, timely investment decisions. In order to qualify for a rating, an open-end fund must either have three years of risk and return data or be an additional share class of an existing fund with at least three years of performance statistics.

Funds rated "A" or "B" are considered "Buy" based on a track record of higher than average risk-adjusted performance. Funds at the "C" level are rated as "Hold," while underperformers at the "D" and "E" levels our model ranks as "Sell." Regardless of rating, with any fund you can lose money. Good luck.

-- -- Written by Kevin Baker in Jupiter, Fla.

MORE FROM THESTREET RATINGS:


Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering equity and mutual fund ratings. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

More from Emerging Markets

Market Movers: Central Bank Meetings

Market Movers: Central Bank Meetings

Complacency Rules as Investors Ignore Risks From China to Trump

Complacency Rules as Investors Ignore Risks From China to Trump

The S&P 500 Has Returned to Its January High

The S&P 500 Has Returned to Its January High

US Stocks Turn Red as China Plans WTO Retaliation in Latest Trade War Skirmish

US Stocks Turn Red as China Plans WTO Retaliation in Latest Trade War Skirmish

Striking Options: NASDAQ, FX, and Equities

Striking Options: NASDAQ, FX, and Equities