Back to Community
Inverse ETFs & Hedging

I had a question regarding inverse ETFs and the contest.

Is shorting only inverse ETFs considered cheating since they are essentially long positions (or just a mirror image).

With that said, wouldn't going long on an inverse ETF (in a long only strategy) be a more streamlined hedge to meet the contest requirements, even though there would technically be no short positions?

sorry if my question sounds like a riddle :)

1 response

Seems that as long as you can meet the abs(beta) < 0.3, then everything should be copacetic in shorting an inverse ETF. Regarding going long on an inverse ETF, my understanding is that it is better practice (in the context of the Q contest/fund) to simply short the underlying index, but I don't recall the rationale.