11 Short ETFs With Highest One Year Returns

While most investors are trying to play defense during the current crash, some investors are using short stock positions and short ETFs to extract positive gains amid significant losses for the overall markets.

First, investors must understand that using short positions is very risky. A short position — or shorting an equity — involves betting that an equity will decline in value and taking advantage of that decline to generate profit. The main difference from the better-known method of going long is that the trader does not own shares of the shorted equity. Instead, the investor just borrows the shares from a broker. Technically, the broker borrows the share from another investor that owns a particular equity.

After borrowing the shares of an equity that might decline in value from the broker, the investor sells the shares and pockets the money. If the equity’s price falls, the investor uses a portion of the funds from the sale to buy back the same number of shares of the equity in question. Since the new shares are purchased at the price that is lower than the sale price, the investor keeps the difference. This sounds quite simple. However, the risk exposure is significantly higher than trading long.

Potential Hazards of Short Trading

First, borrowing the shares from a broker has a cost. In addition to the cost of the shares, investors must pay broker transaction fees as well as potential interest on the amount equivalent to the cost of borrowed shares. Furthermore, the investors cannot hold the borrowed shares indefinitely until the share price drops to a desired level. The agreement with the broker defines a specific predetermined date when the investor must return the borrowed shares, which creates a lot of uncertainty.

An additional downside to shorting equities is loss exposure. Going long on an equity limits the potential loss to the amount invested. For instance, an investor that invests $10,000 in a stock will lose no more than that amount, even if the company goes bankrupt and renders those shares worthless. However, a shorted stock has theoretically no limit on the upside. Therefore, shorting a stock whose share price ends doubling will turn a $10,000 bet into a loss of $10,000. Moreover, a shorted stock can skyrocket — like some biotech and pharmaceutical stocks have done over the past few weeks — and turn a $10,000 short bet into a $20,000, $30,000, $50,000 loss or more.

Short Exchange Traded Funds (ETFs)

Because of the high degree of risk associated with this type of investing, many investors stay away from shorting individual stocks. However, investors can still take advantage of declining markets by buying short ETFs. While still much riskier than other types of trading, short ETFs offer diversification of including multiple individual equities, which slightly reduces overall risk compared to shorting individual stocks.

Another important point about short ETFs that investors must understand is that this type of equity can be effective, but only over the short term.

Here are the 11 ETFs that pay high dividend yields.

Short ETFs With Highest One Year Returns: #11

ProShares Short Financials ETF (NYSE:SEF)

Market Cap: $31.76M

First Dividend Paid: 2018

Latest Close Stock Price: $10.68

Projected 12 Month Dividend Yield: 5.15%

Trailing 12 Month Dividend Yield: 5.17%

Short ETFs With Highest One Year Returns: #10

ProShares Short MSCI Emerging Markets (NYSE:EUM)

Market Cap: $31.88M

First Dividend Paid: 2007

Latest Close Stock Price: $14.49

Projected 12 Month Dividend Yield: 4.21%

Trailing 12 Month Dividend Yield: 4.20%

Short ETFs With Highest One Year Returns: #9

ProShares Short MSCI EAFE (NYSE:EFZ)

Market Cap: $45.98M

First Dividend Paid: 2007

Latest Close Stock Price: $17.19

Projected 12 Month Dividend Yield: 4.77%

Trailing 12 Month Dividend Yield: 4.75%

Short ETFs With Highest One Year Returns: #8

ProShares UltraShort MSCI Japan (NYSE:EWV)

Market Cap: $4.29M

First Dividend Paid: 2007

Latest Close Stock Price: $11.43

Projected 12 Month Dividend Yield: 3.59%

Trailing 12 Month Dividend Yield: 3.63%

Short ETFs With Highest One Year Returns: #7

ProShares Short Russell 2000 (NYSE:RWM)

Market Cap: $337.00M

First Dividend Paid: 2007

Latest Close Stock Price: $21.93

Projected 12 Month Dividend Yield: 5.11%

Trailing 12 Month Dividend Yield: 5.11%

Short ETFs With Highest One Year Returns: #6

UltraShort Basic Materials ETF (NYSE:SMN)

Market Cap: $2.36M

First Dividend Paid: 2019

Latest Close Stock Price: $7.61

Projected 12 Month Dividend Yield: 5.12%

Trailing 12 Month Dividend Yield: 5.13%

Short ETFs With Highest One Year Returns: #5

ProShares UltraShort FTSE Europe (NYSE:EPV)

Market Cap: $64.41M

First Dividend Paid: 2019

Latest Close Stock Price: $8.49

Projected 12 Month Dividend Yield: 3.53%

Trailing 12 Month Dividend Yield: 3.54%

Short ETFs With Highest One Year Returns: #4

ProShares UltraShort Russell2000 (NYSE:TWM)

Market Cap: $81.23M

First Dividend Paid: 2007

Latest Close Stock Price: $12.47

Projected 12 Month Dividend Yield: 4.49%

Trailing 12 Month Dividend Yield: 4.52%

Short ETFs With Highest One Year Returns: #3

ProShares UltraPro Short MidCap400 (NYSE:SMDD)

Market Cap: $4.38M

First Dividend Paid: 2019

Latest Close Stock Price: $12.56

Projected 12 Month Dividend Yield: 3.58%

Trailing 12 Month Dividend Yield: 3.61%

Short ETFs With Highest One Year Returns: #2

UltraPro Short Russell 2000 (NYSE:SRTY)

Market Cap: $119.73M

First Dividend Paid: 2018

Latest Close Stock Price: $32.73

Projected 12 Month Dividend Yield: 4.86%

Trailing 12 Month Dividend Yield: 4.86%

Short ETFs With Highest One Year Returns: #1

ProShares Ultra Short Oil & Gas (NYSE:DUG)

Market Cap: $16.32M

First Dividend Paid: 2018

Latest Close Stock Price: $9.05

Projected 12 Month Dividend Yield: 4.75%

Trailing 12 Month Dividend Yield: 4.71%

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