Hedging: Seeking portfolio protection?

While some investors can handle small market declines or losses, no one likes to lose money. Adding hedging to your portfolio can be a way to seek to protect your portfolio from market declines by taking a contrary investment position.

While, in the past, hedging has been very difficult for most investors to do, the introduction of the BetaShares Bear Series of funds now provides investors with a simple and cost-efficient way to seek to profit from or protect their portfolio against declines in the market.

The Funds have been designed to go up when the sharemarket goes down (and vice versa), and therefore allow investors to buy funds that provide ‘short’ exposure to the market. The BetaShares Bear Series currently provides short exposure to the Australian and U.S. sharemarkets (the Funds should not be expected to provide the exact opposite of the relevant sharemarket return over any time period).

Because the Funds are traded on the ASX, investors can now access short exposure as simply as buying any share, meaning no need to trade complicated instruments such as CFDs or to short individual stocks.

Hedging is another form of diversification

The BetaShares Bear Series can be used by investors as a tactical trade – introducing a negatively correlated investment to their share portfolios. Including a Fund that seeks to go up when the market goes down can help protect your portfolio against market declines.

Benefits of using the BetaShares Bear Series to hedge your portfolio:

  • Simple way to access short exposure – ability to obtain returns that are negatively correlated to either the U.S or Australian sharemarket as simply as buying a share
  • Convenience – avoid the complications and costs of using other ‘short’ investment products, such as CFDs or other derivatives
  • No margin calls for investors – investors cannot lose more than their initial investment
  • Transparent – portfolio exposure, value of the Fund’s assets, net asset value per unit and portfolio holdings are available on our website daily

The BetaShares Bear Series

ASX Code Description
BEAR Australian Equities Bear Hedge Fund - seeks to generate returns that are negatively correlated to the returns of the Australian share market
BBOZ Australian Equities Strong Bear Hedge Fund - seeks to generate magnified returns that are negatively correlated to the returns of the Australian share market
BBUS U.S. Equities Strong Bear Hedge Fund - seeks to generate magnified returns that are negatively correlated to the returns of the U.S. share market

Find out more information about the BetaShares Bear Fund Series.

The Funds’ strategies of seeking returns that are negatively correlated to market returns are the opposite of most managed funds. Also, for BBOZ and BBUS, seeking to generate magnified returns means both investment gains and losses can be expected to be magnified. As such, the Funds may not be suitable strategies for all investors. Investors should seek professional financial advice before investing, and monitor their investment actively. An investment in a Fund should only be considered as a component of an investor’s overall portfolio. The Funds do not track a published benchmark.

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