The global share markets might be plummeting and currency trading is chaotic, but there are some Australian investors are making money in something called bear funds.
Bear funds rise in value when the market heads south and they are experiencing substantial inflows as the global rut continues.
BetaShares run several of these funds and they have all increased in value and subscription over the past few weeks as people are seeking to hedge their portfolios against further falls in equity and currency markets.
Australian equity investors are able to take a short position on a range of stocks chosen by the BetaShares as the most likely to be hit by volatility.
One fund’s traded value has increased to 300% since its launch in July 2012 and another is up by 400% that was launched in April 2014 according to managing director, Alex Vynokur.
There is a growing concern over the markets in the coming months and there are many that are trying to not to risk their portfolio and to also protect themselves from the volatility.
The Australian volatility index went up to 79.3% in August, whilst the S&P ASX200 lost 8.6%.
During this period, one of the BetaShares bear funds raked in 20 times the average value that it has traded since its creation.
Bear funds provide more tax efficient and sustainable options for investors.
The increase in the usage of funds shows that people are becoming aware of the risks and positioning their portfolio to protect themselves from suffering large losses.
When there is global turmoil, investors do not have that many options especially when there will be a rate hike by the US Federal Reserve.
The US dollar and gold spot price have generally been seen as safe assets, but in the last month only gold rose by 3.6% and the greenback dropped by 1.6%.