Betashares Australian Equties Bear Fund (ASX Bear) is the only inverse exchange traded fund listed on the ASX. An inverse ETF increase in value when the underlying benchmark decline.
ASX Bear aim to return the inverse movement of the ASX 200 index. The 200 index comprise of the largest 200 companies listed on the Australia Stock Exchange. The weight of each company is relative to the total market capitalisation of the 200 companies combined.
ASX 200 Index ETF (ASX:STW) gives investors exposure to the ASX 200 index by purchasing shares in the companies that comprise the index. Portfolio allocation is based on the companies weight in the index.
BetaShares Inverse ETF achieve the inverse correlation with ASX 200 through selling ASX 200 futures. Total ETF return is dependent on the movement in the futures during the period as well as the yield on the cash.
Future contract introduces additional risks and costs such as basis risk and cost of rolling contracts to the next front month/quarter contract.