Inverse ETFs vs. Short Selling

One advantage of inverse ETFs is that they do not require the investor to hold a margin account as would be the case for investors looking to enter into short positions. There are several inverse ETFs that can be used to profit from declines in broad market indexes, such as the Russell 2000 or the Nasdaq 100. In addition, it is possible to buy inverse ETFs that focus on a specific sector, such as financials, energy or consumer staples. Most investors look to purchase inverse ETFs so they can hedge their portfolios against falling prices.