by 
The Curious Bag
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Most ETFs, or electronically traded funds, have mostly long positions, meaning they are betting on an increase in the market rise. A reverse ETF invests short, betting on a decline in the market.
Significance
ETFs are traded like stocks on stock exchanges and most investors buy them in the secondary market. ETFs usually track indexes such as the Nasdaq 100 or the Dow Jones industrial average or commodities such as gold or silver.
Reverse ETFs
Some popular reverse ETFs are QID, which corresponds to twice the opposite of the Nasdaq 100, and SDP, which corresponds to twice the opposite of the Dow Jones U.S. Utilities Index. These funds correspond to twice the opposite because they make use of margin.
Benefits
The main benefit of a reverse ETF is that it allows an investor who is pessimistic about the direction of a market to try and profit during that time period.
Considerations
Attempting to time the market is challenging for all investors. Investors rely on models of past market behavior, technical chart analysis or fundamental value ratios.
Warning
In the long run, stocks tend to rise which is why some investors advocate the buy and hold strategy. If held for a long period, a reverse ETF would probably be a bad investment.
Source:
Seeking Alpha: UltraShort ProShares ETFs: 24 ways to Benefit From Going Short
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