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BFG Inverse Hedge
The objective of the BFG Inverse Hedge strategy is to provide short-term capital appreciation through investing in inverses of major market indices by actively managing positions of exchange-traded funds and products (ETFs and ETNs).
What is an Inverse Hedge?
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Inverse hedging refers to a potent risk diversification strategy achieved by investing in vehicles that are inversely correlated to other assets. This strategy actively manages positions of exchange-traded funds and notes (ETFs & ETNs) that uses various derivatives to profit from a decline in the value of an underlying index including, but not limited to, the S&P 500, NASDAQ Composite, and the FAANG stocks.
Portfolio Composition
Inv FAANG & Tech
Inv US Markets
Inv Global Markets
24%
24%
52%
Benefits of Investing in Inverse Hedge
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Positive returns during market downturns: Inverse investment vehicles move in the opposite direction of the underlying index tracked, generating profits while the underlying asset falls in value.
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Less risk than short selling: Inverse investments can produce similar results to short selling with a fraction of the risk and without the need for utilization of a margin account.
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Hedge against inflation: Inverse hedging is only meant to be utilized on a short-term basis during bear markets. The US stock market has been around for over 230 years and historically always climbed to new highs over time.
Risks of Investing in Inverse Hedge
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Holding this type of investment during market rallies and overall bull markets may erode portfolio value. Specific types of risks such as compounding risk, derivative security risk, and volatility risk are also present in inverse investment vehicles. In addition, this strategy may hold leveraged ETFs/ETNs which could magnify losses in a market upturn.
Why We Invest in Inverse Hedge
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Investing in inverse hedging allows us to generate positive returns even while the rest of the markets are falling. Opposed to just holding cash, which erodes value over time due to inflation along with client potential income needs, we employ this strategy in an effort to maintain account growth at all times. Because this strategy is not designed to be held long-term, we aim to tactically use this portfolio during periods of market downturns only.
We use specialized ETFs & ETNs offered by...
Investment firm offering multiple sector specific exchange traded notes used by professional investors. Featured ticker in strategy: FNGD
Investment firm offering multiple inverse & leveraged exchange traded funds used by professional investors. Featured tickers in strategy: DOG, SQQQ