What Is HDGE?
Don't lump this fund in with other hedge-fund-style ETFs.
Instead, think of the word "hedge" implied by the fund's ticker in
the context of directly hedging equity exposure that you have
elsewhere in your portfolio.
From a performance point of view, the AdvisorShares Active Bear
(NYSEArca:HDGE) is an actively managed inverse equity fund. One
look at the chart below showing HDGE's returns against the SPDR
S&P 500 (NYSEArca:SPY) confirms this.
HDGE currently outpaces its 1x inverse equity competitors in
terms of one-year returns as the table below shows. (HDGE's peers
are the ProShares Short S&P 500 (NYSEArca:SH), the ProShares
Short Russell 2000 (NYSEArca:RWM), the ProShares Short Dow30
(NYSEArca:DOG) and the ProShares Short QQQ (NYSEArca:PSQ)).
I wonder why. Are they betting on outperformance from the fund's
managers, along the lines of Prudent Bear mutual funds and others?
Or are they skirting the "inverse" label that applies to HDGE's
peers? Inverse funds are disallowed from some portfolios or barred
from some advisors' platforms. HDGE avoids the letter if not the
spirit of any rules-based ban on "inverse" funds exposure in a
Taking a step back, the case for hedging equity exposure in a
portfolio in these uncertain times-using any of these funds-can
make sense. For this purpose, the simple solution is to match the
inverse fund to your equity position. If you're long in QQQ, for
example, then PSQ is the way to hedge.
Whatever the reason, HDGE has undeniably attracted major
investor interest. If you want in, just be clear on what this fund
is:a well-established, actively managed, unlevered U.S. equity
inverse fund with a high fee and decent net performance
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