Inverse ETF

See: Exchange-Traded Fund (ETF). Then multiply by minus 1.

Regular Exchange-Traded Funds (ETFs) are stock-like trading instruments that let you bet on the performance of sectors or indexes, rather than putting money on individual companies. You think the pharmaceutical industry is going to do well in the future. But you aren't sure which particular companies are going to succeed. Buy a pharma ETF and bet on the entire sector. Or...you want to just bet on the market as a whole, rather than picking individual winners and losers. In that case, buy an ETF tied to a broad index like the S&P 500.

Inverse ETFs go the other way. Want to bet against the pharma sector? Buy an inverse ETF for the pharma sector. Think the Fed's latest decisions are going to throw the market into the tank? Put money into an inverse ETF linked to the S&P 500.

You buy that S&P 500 inverse ETF. The S&P index drops 2% the next day. That means your inverse ETF went up 2%. The next day, the S&P 500 recovers slightly, rising 1%. As a result, your investment dipped 1% for that session. The inverse ETF does the opposite of the index it's linked to.

An inverse ETF lets you take a short position, without actually going through the trouble of a short sale.