Investors who hope to make money even when the share market goes down now have the opportunity to do so, with the listing of the BEAR Fund on the Australian Securities Exchange (ASX).
The BEAR Fund is believed to be the first managed fund to be listed on the ASX that allows investors to profit from, or hedge against, a fall in the value of the Australian share market.
The BEAR Fund was officially launched by exchange traded funds provider BetaShares on Tuesday.
BetaShares' head of investment strategy, Drew Corbett, said the fund had a simple structure, investing all of its assets in cash and cash equivalents and obtaining short exposure via futures contracts (SPI 200 futures on the ASX).
Generally, taking a short position is when one sells a security borrowed from a third party, anticipating the security will go down. One closes the short position by buying back the same number of securities at the lower price before returning them to the third party.
Mr Corbett said the practice of shorting individual stocks could be difficult and expensive for investors to implement.
But investors could buy and sell units in the BEAR Fund on the ASX like any share.
Mr Corbett said investors should note that the fund aimed to make money when the market was down and that investors would lose money if the market rose.
"People should understand that this fund is designed to profit at or protect against a decline in the share market," Mr Corbett said.
"Conversely, if the market were to rally or go up, this fund would go down in value in similar proportions."
Mr Corbett said the BEAR Fund represented a "new evolution for the market".
"I think it's an innovation that's overdue for the market," he said.
"In recent times they (bear funds) are highly topical and much more topical since the GFC (global financial crisis)."
Mr Corbett said the BEAR Fund may suit some investors who did not wish to sell their equities despite a decline in the share market but wished to protect themselves against some of their losses.
"This allows them to use a listed fund on the exchange that would give them the hedging capability in a falling market without having to adjust their original portfolio," he said.
Mr Corbett cautioned that the BEAR Fund was a product that should be treated like a short position, which required full monitoring by investors and should be maintained within an investor's portfolio for only as long as it was suitable.
The BEAR Fund is believed to be the first managed fund to be listed on the ASX that allows investors to profit from, or hedge against, a fall in the value of the Australian share market.
The BEAR Fund was officially launched by exchange traded funds provider BetaShares on Tuesday.
BetaShares' head of investment strategy, Drew Corbett, said the fund had a simple structure, investing all of its assets in cash and cash equivalents and obtaining short exposure via futures contracts (SPI 200 futures on the ASX).
Generally, taking a short position is when one sells a security borrowed from a third party, anticipating the security will go down. One closes the short position by buying back the same number of securities at the lower price before returning them to the third party.
Mr Corbett said the practice of shorting individual stocks could be difficult and expensive for investors to implement.
But investors could buy and sell units in the BEAR Fund on the ASX like any share.
Mr Corbett said investors should note that the fund aimed to make money when the market was down and that investors would lose money if the market rose.
"People should understand that this fund is designed to profit at or protect against a decline in the share market," Mr Corbett said.
"Conversely, if the market were to rally or go up, this fund would go down in value in similar proportions."
Mr Corbett said the BEAR Fund represented a "new evolution for the market".
"I think it's an innovation that's overdue for the market," he said.
"In recent times they (bear funds) are highly topical and much more topical since the GFC (global financial crisis)."
Mr Corbett said the BEAR Fund may suit some investors who did not wish to sell their equities despite a decline in the share market but wished to protect themselves against some of their losses.
"This allows them to use a listed fund on the exchange that would give them the hedging capability in a falling market without having to adjust their original portfolio," he said.
Mr Corbett cautioned that the BEAR Fund was a product that should be treated like a short position, which required full monitoring by investors and should be maintained within an investor's portfolio for only as long as it was suitable.
