Buy These 2 Bearish ETFs as the Fed Aggressively Tightens Rates in 2022

NYSE: SH | ProShares Short S&P500 News, Ratings, and Charts

SH – The Fed is expected to impose a double-sized rate hike next month to tame the raging inflation. The benchmark indices are down for the month. With bearish sentiment surrounding the broad market, we think these bearish ETFs, ProShares Short S&P 500 (SH) and ProShares Short QQQ (PSQ), might be solid hedges against a market downturn.

Inflation levels in the United States are running at a level not seen since the 1980s, and the Federal Reserve officials are planning to raise interest rates aggressively. The Fed is expected to increase the target policy rate by half a percentage point in its next meeting on May 3-4. Fed Chair Jerome Powell gave the indication of a double-sized rate hike as inflation is “much higher now,” and it might be appropriate for the Fed to move a “little more quickly.”

On Thursday, the benchmark indices posted gains. The Dow rose 1.9%, and the S&P 500 gained 2.5%, while the tech-heavy Nasdaq Composite jumped 3.1%. However, the indices are still trading in the red for the month. The Dow is off 2.2%, the S&P is down 5.4%, while the Nasdaq is down 9.5% and is expected to post its worst month since March 2020. Moreover, Morgan Stanley (MS) equity strategist Mike Wilson expects the S&P to join the bear market within weeks due to the Fed’s tightening monetary policy.

Given this backdrop, inverse ETFs that bet on the market decline, ProShares Short S&P500 (SH - Get Rating) and ProShares Short QQQ (PSQ - Get Rating), might be solid bets to hedge against a downturn.

ProShares Short S&P500 (SH - Get Rating)

SH seeks a return that replicates the inverse return of its underlying S&P 500 benchmark before fees and expenses. The fund might be an attractive option for investors looking to bet against the large-cap U.S. equities sector of the underlying index. The fund aims to deliver inverse results over a single trading session, with exposure resetting on a monthly basis.

As of April 27, the fund’s top holding is the U.S Dollar with a 21.37% weighting, followed by the United States Treasury Bills 0.0% 26-MAY-2022 with an 8.88% weighting and the United States Treasury Bills 0.0% 02-JUN-2022 with an 8.43% weighting. SH has a NAV of $14.83 as of April 28 and an expense ratio of 0.88%, significantly lower than the category average of 1.11%.

Over the past year, SH’s fund flows came in at $921.69 million and $586.82 million over the past three months. The fund has gained 8.7% year-to-date and 6% over the past month to close yesterday’s trading session at $14.81. It has a five-year monthly beta of a negative 0.89.

SH’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The fund has an A grade for Trade and a B grade for Buy & Hold and Peer. In the 49-ETF Inverse Equities ETFs group, it is ranked #10. The group is rated B. Click here to see more of SH’s component grades.

ProShares Short QQQ (PSQ - Get Rating)

PSQ offers inverse exposure to the NASDAQ-100 index, which comprises the 100 largest non-financial securities on the NASDAQ. The fund seeks to provide a return that is -1x of the underlying benchmark for a single day.

With a NAV of $12.68 as of April 28, the fund has an expense ratio of 0.95%, significantly lower than the category average of 1.11%. As of April 27, the fund’s top holdings include the U.S. Dollar with a 25.43% weighting, United States Treasury Bills 0.0% 02-JUN-2022 with a 22.76% weighting, and the United States Treasury Bills 0.0% 05-MAY-2022, with a 10.77% weighting.

PSQ’s fund flows came in at $598.44 million over the past year and $185.26 million over the past three months. The ETF has gained 17.1% year-to-date and 10.4% over the past month to close yesterday’s trading session at $12.68.

It’s no surprise that PSQ has an overall A rating, which translates to Strong Buy in our POWR Ratings system.

The ETF has a Trade and Peer grade of A. It is ranked #1 in the same group. To see additional POWR Ratings for PSQ, click here.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


SH shares were trading at $15.27 per share on Friday afternoon, up $0.46 (+3.11%). Year-to-date, SH has gained 12.11%, versus a -12.39% rise in the benchmark S&P 500 index during the same period.


About the Author: Anushka Dutta


Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SHGet RatingGet RatingGet Rating
PSQGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Trump or the Fed More Important to Stock Investors?

The S&P 500 (SPY) is flirting with new highs once again. But it is not very clear what is driving these stock price gains. That is why Steve Reitmeister shares his latest views including a market outlook, trading plan and top picks to stay on the right side of the action.

3 Dividend Growth Stocks for Long-Term Wealth

Dividend-growth stocks offer steady income and long-term value. With the Fed holding rates and inflation expected to ease, now is an opportune time to invest in companies like AbbVie (ABBV), Energy Transfer (ET), and Cheniere Energy (CQP) that consistently raise payouts. Read more…

3 Sub-$10 Tech Stocks with Multibagger Potential

The tech market is booming, fueled by AI, cloud computing, and digital transformation. With next-gen software, automation, and 5G driving growth, investors have massive opportunities. For those seeking high potential without the hefty price tag, sub-$10 stocks like Yext, Inc. (YEXT), Eventbrite (EB), and inTEST Corp. (INTT) could be your next big win. Read more...

Viavi Solutions vs. Lumentum Holdings: Which Optical Tech Stock Shines Brighter?

The optical tech industry is well-positioned for growth due to technological advancements and increasing demand for seamless connectivity. So, let’s analyze optical tech stocks, Viavi Solutions (VIAV) and Lumentum Holdings (LITE), to determine which optical tech stock shines brighter. Read on...

Investors in “Wait and See” Mode

Have you noticed that the S&P 500 (SPY) has been trading in a tight trading range of only 6,000 to 6,100 the past few weeks? Steve Reitmeister shares why this is happening along with a game plan for being on the right side of the market action. Read on for the full story...

Read More Stories

More ProShares Short S&P500 (SH) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SH News