Question

Investing: Inverse ETFs (Exchange Traded Funds)   Inverse ETFs, sometimes referred to as "bear market" or "short" funds, are designed to deliver the opposite of the performance of the index or category they track, and so can be used by traders to bet against the stock market. The following table shows the performance of three such funds as of August 5, 2015.†

	Year-to-Date Loss (%)
MYY (ProShares Short Midcap 400)	6
SH (ProShares Short S&P 500)	5
REW (ProShares UltraShort Technology)	7

You invested a total of $8,000 in the three funds at the beginning of 2011, including an equal amount in SH and REW. Your year-to-date loss from the first two funds amounted to $340. How much did you invest in each of the three funds?

Answer 1

Solution

Let investment in SH and REW be x each

Therefore, Investment in MYY = 8000-x-x = 8000-2x

Now, Year to date Loss from MYY and SH = 340

Which means, 0.06(8000-2x) + 0.05x = 340

480 – 0.12x + 0.05x = 340

0.07x = 140

X = 2000

Hence, Investment in

MYY = $4,000

SH = $2,000

REW = $2,000