Investors poured into oil focussed equities during the month of March. 

Meanwhile, bear focussed ASX ETFs also outperformed. 

"Bear-focused" ETFs are designed to profit when markets fall (or to hedge against downturns).

March overview

The Betashares Australian ETF review revealed that in a month dominated by the outbreak of conflict in Iran, the Australian ETF industry recorded very strong net inflows of $5.6 billion. 

Despite this, market movements pushed funds under management down by $13.8 billion to $329.4 billion.

According to Tom Wickenden, Investment Strategist, the short-term threat from the Iran war is the oil price spike's impact on growth and inflation. 

But the longer-term implications may matter most for investors, long after any resolution. 

Russia's invasion of Ukraine accelerated defence spending and European energy diversification. The Iran conflict is now doing the same for global energy self sufficiency, while fracturing the US security umbrella and embedding geopolitics as a structural driver of asset prices rather than an episodic risk to be faded.

Mr Wickenden explained that as a response, investor flows have picked up in select hedges: 

• Energy producers
• Uranium
• Defence
• Critical minerals
• Agricultural commodities.

March also saw a second-rate hike from the RBA in 2026.

For Australian equities this reinforces three key trends: the rotation toward income and value factors, pressure on rate sensitive sectors, and the same commodity shock that has complicated the RBA's path is generating meaningful earnings improvements for Australian energy and material companies.

Best performing ASX ETFs in March

According to Betashares, March's top performers were dominated by defensive and counter-cyclical exposures. 

This came as a sharp rally in crude oil lifted commodity focused funds while equity bear funds surged on the back of significant market volatility and risk-off sentiment. 

The best performing ASX ETFs in March were: 

• BetaShares Crude Oil Index ETF – Currency Hedged (Synthetic) (ASX: OOO) rose 55.9%
• BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) rose 19.33%
• Betashares Ethereum ETF (ASX: QETH) rose 13.33%
• Betashares US Equities Strong Bear Currency Hedged Complex ETF (ASX: BBUS) rose 12.3%
• Global X Ultra Short Nasdaq 100 Hedge Fund (ASX: SNAS) rose 11.94%.

The Betashares Crude Oil Index ETF led the way in March. 

The fund aims to track the performance of an index (before fees and expenses) that provides exposure to crude oil futures, hedged for currency movements in the AUD/USD exchange rate.

It benefited as oil prices surged following the blockage of the Strait of Hormuz.

The post What were the best performing Betashares ASX ETFs in March? appeared first on The Motley Fool Australia.

According to the ETF Market Scoop report, the Australian ETF market is off to a record-breaking start in 2025, with YTD net flows reaching $27.2 billion, an 89% increase compared to the same period last year.

Additionally, July 2025 marked a historic milestone for the ETF industry, setting a new record for monthly inflows with over $5.9 billion in net flows, surpassing the previous high of $4.8 billion set in January this year. 

The Australian ETF market has grown 34.1% over the past year, and is running at a five-year compound annual growth rate (CAGR) of 34.0% p.a.

ETF short term winners

The Global X report also identified best performers during July. 

Ethereum was the best-performing ETF category in July 2025, rising over 57% for the month. The rally was supported by renewed investor confidence following the passage of the GENIUS Act in the US, which provided long-awaited regulatory clarity around stablecoins and digital asset infrastructure.

Broad-based global share ETFs were the clear standout by a wide margin, attracting around $885 million in net flows. 

The report also highlighted the funds with the best year to date returns as at July 31. These included: 

• Global X Defence Tech ETF (ASX: DTEC) lifted 58.2% 
• Vaneck Global Defence ETF (ASX: DFND) rose 54%
• BetaShares Global Gold Miners ETF – Currency Hedged (ASX: MNRS) grew 50.1%

Unsurprisingly, gold and defence focussed funds led the way. 

Investors poured into these sectors this calendar year amidst global conflict and commodity price surges.

ETF short term losers

According to the report, in July, the Australian resources sector ETFs experienced notable outflows, recording $52 million in net outflows, marking the fourth-worst month historically for the category. 

Financials also faced pressure, seeing $22 million in net outflows. 

These trends may reflect investor caution ahead of the upcoming Australian reporting season, coupled with ongoing uncertainty around the materials sector's recovery prospects. Additionally, Australian banks trading at a premium valuation may have contributed to the cautious sentiment, prompting some investors to reduce exposure in the sector amid a broader backdrop of market volatility and macroeconomic concerns.

Yearly winners and losers

Zooming out a little further, the report also identified the funds that rose and fell the most over the past 12 months to July 31. 

These included: 

• Betashares Video Games and Esports ETF (ASX: GAME) rose 80.7% 
• Vaneck Bitcoin Etf (ASX: VBTC) gained 80.1%
  
  

The funds that fell the most over the past 12 months to July 31 included: 

• Etfs Ultra Short Nasdaq 100 Hedge Fund (ASX: SNAS) fell 35.1%. 
• BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) fell 16.9%. 

The post A record breaking month for ASX ETFs in July appeared first on The Motley Fool Australia.

The Vanguard Australian Shares Index ETF is an index-based ETF that tracks the performance of the 300 largest companies by market capitalisation in the S&P/ASX 300 Index (ASX: XKO).

This gives VAS investors exposure to major shares like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL), Wesfarmers Ltd (ASX: WES), and Goodman Group (ASX: GMG).

One of the benefits of exchange-traded funds is they provide instant diversification in one trade. 

Let's review the top 10 ETFs traded in August, according to Selfwealth Ltd (ASX: SWF) data.

Top 10 most traded ASX ETFs in August

Here are the top 10 most traded ETFs in August.

The ETFs are ranked by total transaction volume. The volume includes both buy and sell orders.

We have also included the percentage of buy orders, which indicates investors' level of conviction.

Which ETF attracted the strongest buyer interest?

The BetaShares Diversified All Growth ETF attracted the most buy orders among the 10 most traded ETFs in August. Investors' conviction was very high with 88.8% of orders being purchases.

The DHHF ETF provides exposure to a diversified portfolio of approximately 8,000 shares with high long-term growth potential. Its market cap is about $473 million.

About 36.5% of the fund is in ASX shares, including large-caps, mid-caps, and small-caps.

The rest is in international shares. These include United States stocks (39.2%), developed markets outside the US (18%), and emerging markets (6.3%).

This ASX ETF has a management fee of 0.19% per annum.

The annual distribution is approximately 2.2%, paid quarterly.

Distributions for Australian investors are automatically reinvested through the dividend reinvestment plan (DRP), unless they opt out.

Since its inception in December 2020, the DHHF ETF has returned an average of 11.05% per annum.

The post Top 10 most traded ASX ETFs in August appeared first on The Motley Fool Australia.

Investment choices can provide insights into the mood of different investor demographics.

Data from broker Selfwealth Ltd (ASX: SWF) has revealed where investors have been putting their money in FY24 to date, from 1 July 2023 to 7 August 2023.

Most popular trades

Selfwealth has provided a list of ASX shares and investments that millionaire millennials have been trading in. It's sorted by the number of trades rather than the number of units or value of trades so that a few rich investors don't skew the results with large trades.

That said, here are the ASX investments with the most amount of trades:

BetaShares Geared Australian Equity (Hedge Fund) (ASX: GEAR) is an exchange-traded fund (ETF) that's betting on the S&P/ASX 200 Index (ASX: XJO) to rise. It borrows money to amplify the gains (and losses) made by the portfolio. Current gearing is 57%, which to some people may not be a comfortable level of borrowing for their own portfolios.

Global X Ultra Long Nasdaq 100 Hedge Fund (ASX: LNAS) is invested in 100 of the largest businesses on the NASDAQ 100 stock exchange while utilising futures contracts.

BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) is an ETF that enables investors to bet that the ASX 200 is going to fall by using futures. It uses leverage, which amplifies the returns and losses. Since its inception in April 2015, the ASX ETF has delivered an average return per annum of negative 20.3% to June 2023.

Vanguard Australian Shares Index ETF (ASX: VAS) is an ETF focused on 300 of the largest ASX shares.

BetaShares Crypto Innovators ETF (ASX: CRYP) is an ETF that's invested in global companies that provide exposure to the cryptocurrency economy. In this portfolio are names like Marathon Digital Holdings, Riot Platforms, and Coinbase Global.

Stanmore Resources Ltd (ASX: SMR) is an ASX coal share that has seen its share price rise to a much higher level than before Russia invaded Ukraine.

Other interesting data points

Looking at the wider millennial cohort, not just the rich ones, the largest number of trades involved ETFs. They were: the VAS ETF, Vanguard Diversified High Growth Index ETF (ASX: VDHG), Vanguard MSCI Index International Shares ETF (ASX: VGS), iShares S&P 500 ETF (ASX: IVV), and Betashares Nasdaq 100 ETF (ASX: NDQ).

Miners made up some of the most popular investments by the wider millennial cohort, including Fortescue Metals Group Ltd (ASX: FMG), Core Lithium Ltd (ASX: CXO), and Pilbara Minerals Ltd (ASX: PLS).

Non-millionaire baby boomers and Gen Xers liked trading in Core Lithium as well. It seems Gen X hasn't been doing much ETF trading. Millionaire baby boomers have, unsurprisingly, been trading a lot in ASX blue chips, and predominately selling the cash ETF Betashares Australian High Interest Cash ETF (ASX: AAA).

Meantime, millionaire Gen X investors have been interested in technology businesses like Advanced Micro Devices, Intel, and Quantumscape.

The post Top ASX shares wealthy young investors are buying right now appeared first on The Motley Fool Australia.

This is a dramatic change compared to three months ago when 0.33% of the stock was being shorted.

The change in short positioning may indicate that some experts think the bear market is over — at least for now.

As we explain in our Education Centre, shorting is not available to most ASX retail investors. Thus, it largely reflects what the pro ASX shares traders think, and which stocks they reckon will fall in value.

That's how you make money from shorting. You bet the share price will fall and you profit if it does.

Why is this bear market ETF being shorted?

To understand why the experts are shorting this bear market ETF, we need to understand the product.

According to the BetaShares Australian Equities Strong Bear Hedge Fund fact sheet, this is an 'inverse ETF'. It invests in cash and cash equivalents and sells ASX SPI 200 futures contracts.

The ETF generates a "magnified positive return" when the S&P/ASX 200 Accumulation Index (ASX: XJOA) falls on any given day, and a magnified negative return when the index rises.

A 1% fall in ASX 200 shares generally delivers a 2% to 2.75% increase for the fund, and vice versa.

Over the past three months, the S&P/ASX 200 Index (ASX: XJO) has risen by 10.5%. So, that explains why an increasing number of experts have been shorting this bear market ETF over the period.

The BetaShares Australian Equities Strong Bear Hedge Fund share price finished at $3.23 on Friday, down 0.62%. It also hit a new 52-week low of $3.20 in Friday's session.

Which other ASX shares are being shorted?

According to the ASX report, these are the top 5 most shorted ASX shares at the moment. Here we show the percentage of issued capital shorted this week:

1. Global X Ultra Long NASDAQ 100 (ASX: LNAS) 10.9%
2. Global X Ultra Short NASDAQ 100 (ASX: SNAS) 9.8%
3. BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) 6.9%
4. VanEck Small Companies Masters ETF (ASX: MVS) 5.2%
5. Global X US Treasury Bond (Currency Hedged) ETF (ASX: USTB) 5.2%

The post Experts betting against a bear market for ASX shares appeared first on The Motley Fool Australia.

On 11 April, shares in BBOZ closed at $3.81. At the time of writing, the Bear Hedge Fund is trading for $4.38, up 15% in a month.

With so many stocks heading the other way these past four weeks, why is the ASX-listed BBOZ putting in such a good show?

Why BBOZ is making hay this past month

BBOZ is trouncing the market today precisely because that's what the hedge fund is designed to do in times of ASX selloffs.

According to Betashares' website:

BBOZ seeks to generate magnified returns that are negatively correlated to the returns of the Australian share market. The Fund expects to generate a magnified positive return when the S&P/ASX 200 Accumulation Index falls (and a magnified negative return when the index rises).

BBOZ is designed to gain 2% to 2.75% for every 1% decline in the ASX 200 on any given day. When the ASX rises, the Bear Fund will lose value.

Which gives us some good insight into why the fund has been doing so well.

Since this time last month, the S&P/ASX 200 Index (ASX: XJO) is down 6.2%, having dropped another 1.56% in intraday trading today. Which puts the 15% monthly gain for BBOZ right in line with the 2% to 2.75% negative correlation Betashares aims for.

Why has the ASX 200 come under pressure?

After a strong year of gains in 2021, a year that saw BBOZ fall 32.8%, the ASX 200 has come under pressure in 2022 on several fronts.

First, Russia's invasion of Ukraine is roiling geopolitical tensions and sending energy prices rocketing.

Second, investor concerns also include China's COVID-zero policies seeing the country initiate lengthy, intensive lockdowns that could dim the economic growth outlook for the world's second-largest economy.

And then there's the fast-rising inflation in the developed world and resulting interest rate hikes on the horizon.

While those factors have dragged on the overall performance of ASX shares, Betashares BBOZ has marched higher.

The post Why has the Betashares Australian Strong Bear Fund (BBOZ) leapt 15% in a month? appeared first on The Motley Fool Australia.

But even though ASX index funds are some of the most popular ETFs with Aussie investors, not all ETFs track indexes like the ASX 200. And as such, not all ASX ETFs had such a lucrative 2021.

So here is a list of the worst-performing ASX ETFs from last year:

2021's worst ASX ETF performers revealed

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

This ETF from provider BetaShares is first up. ASIA is a fund that tracks a basket of tech-focused shares from the Asia Pacific region. Many of its holdings hail from the People's Republic of China (43.9%), but it also has significant exposure to other countries like Taiwan, South Korea and India. You might recognise some of its top holdings like Taiwan Semiconductor Manufacturing Co, Samsung, Tencent Holdings and Alibaba Group Holding Ltd.

This ETF has clearly felt the repercussions of the slump in many Asian markets over the past year, particularly China's. It returned -14.94% last year.

iShares China Large-Cap ETF AUD (ASX: IZZ)

Another Asia-focused fund, this ETF from iShares was another poor performer last year. As you can probably gather from the name, IZZ invests in the largest companies in China. It holds many of the same companies as ASIA, including Alibaba and Tencent. But other names include Meituan, China Construction Bank Corp and Ping An Insurance. As we've just discussed, China hasn't had the best 12 months, and we can see this reflected in IZZ's performance. This ETF went backwards by 15.3% last year.

ETFS S&P Biotech ETF (ASX: CURE)

Despite its humorous ticker code, investors were probably not too amused by this fund's 2021 performance. CURE is a thematic ETF that focuses on US companies in the biotechnology space in fields such as genetic analysis and engineering. Some of its top holdings include Arena Pharmaceuticals, Biohaven Pharmaceuticals and Incyte Corp. Unfortunately for investors, this fund failed to engineer any growth last year, falling by 15.8% over 2021. Hopefully 2022 will CURE investors' woes.

BetaShares Strong Australian Dollar Fund (ASX: AUDS)

Here we have a different beast. This fund is a simple one and doesn't invest in shares at all. Instead, this ETF from BetaShares gives "geared exposure to changes in the value of the Australian dollar against the US dollar".

According to the provider, "AUDS generally expects to generate a positive return of between 2% and 2.75% for a 1% rise in the value of the Australian dollar against the U.S. dollar on a given day (and vice versa)". Unfortunately, the 'vice versa' is what occurred over 2021. This ETF fell a nasty 16.54% last year as the Aussie declined in value against the greenback for most of 2021.

Short ETFs top worst performing funds of 2021

Our final spot is shared jointly by three ETFs that proved very disappointing indeed for investors. This writer has grouped them together because they all operate in similar ways and their dismal performance can also be blamed on this. The BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ), the BetaShares U.S. Equities Strong Bear Hedge Fund (ASX: BBUS) and the ETFS Ultra Short Nasdaq 100 Hedge Fund (ASX: SNAS) topped the ASX's worst ETF performers in 2021 with steep losses of 32.8%, 46.9% and 48.7% respectively.

These ETFs are 'short' funds that use leverage and other financial engineering to rise in value when the indexes they track fall. BBOZ inversely tracks the ASX 200, while both the BBUS and SNAS ETFs do the same for the US markets. Unfortunately for investors in these funds, both countries' markets rose strongly over 2021, resulting in these heavy losses.

The post Here are the worst performing ASX ETFs of 2021 appeared first on The Motley Fool Australia.

Failing to break past the 6,200 point barrier multiple times has now led to a steady decline in the market. For those investors holding ASX 200 companies in their portfolio, this can be a little daunting. Choosing the right hedge is important if you are looking for portfolio protection.

What is hedging?

A hedge reduces risk of the overall portfolio. Its kind of like having an insurance policy.

I think hedging is sometimes over-complicated in the market. This can be quite confusing, particularly for newer investors. One thing to understand is that a hedge is normally an additional investment. As investors, you have the ability to purchase certain assets that can 'offset' the risk of loss.

This is possible in all markets and all asset classes, not only shares. It's a concept that you can embrace and deploy to protect a portfolio without needing to sell your shares.

Of course, as any transaction imposes a potential tax impact or future impact, you should always consult an accountant and a financial advisor. However, generally, you can purchase these 'hedge' assets very easily and apply instant levels of protection. It's an effective measure when the market looks rocky.

2 popular exchange-traded funds (ETF) used for hedging ASX 200 share portfolios are: BetaShares Australian Equities Bear Hedge Fund (ASX: BEAR) and BetaShares Australian Strong Bear Hedge Fund (ASX: BBOZ).

These ETFs are designed for slightly different purposes. So let's compare.

BetaShares Australian Equities Bear Hedge Fund

'Bear' is an appropriate name for a hedge fund used to combat a bear market.

Even when we aren't quite yet in a 'bear market', we can use Bear as a hedge against potential corrections.

About Bear

Bear aims to produce returns that are negatively correlated to the returns of the ASX 200. If the ASX 200 moves -1%, Bear can be expected to be positive +0.9 – 1.1%.

This is a really interesting concept. Negative correlation means the effect will be the opposite of the market movement. I say this to make it clear that it works both ways. For example, if you were to purchase Bear in a rising ASX market, it would effectively lose value. This fund requires active management.

These are the top 3 uses for Bear:

Hedging

Protect portfolios from market declines. No need to sell your existing holding if you don't want to

Profiting

Astute investors will have worked out that if Bear increasing in value in a falling market, it can also be used for profit purposes. 

Convenience

Purchasing Bear units is simple and fast. You can purchase units the same way you purchase shares. 

BetaShares Australian Strong Bear Hedge Fund 

'Strong Bear' is also an appropriate name here. You have to hand it to BetaShares, their naming skills are up there.

About Strong Bear

Strong Bear aims to produce magnified returns that are negatively correlated to the returns of the ASX 200. If the ASX 200 moves -1%, it can be expected to be positive +2 – 2.75%.

Therefore, active management is even more important for Strong Bear.

Investing tactics are more or less the same as for Bear above.

Deciding on Bear vs Strong Bear

One thing you will notice above is that the multiplier factor is different between our 2 bears.

• Bear – 1% fall in market produces +0.9 – 1.1%
• Strong Bear – 1% fall in market produces +2 – 2.75%

This multiplier is the key to making a decision.

• If you have a lot of cash ready to deploy as a hedge, you might prefer Bear.
• If you have less cash at the ready, you might prefer Strong Bear.

As Strong Bear has a higher multiplier factor, you need less cash in the fund to produce a higher return on the way down.

Foolish Takeaway

Negative correlation ETFs are avoided by investors at times, as they seem risky and are poorly understood. They just require you to pay a little more attention.

The great thing is that they can be purchased instantly, the same as shares. This means that you can purchase them on the day of a market crash, if you had to. If you prefer to be a little more prepared, they can be purchased ahead of time.

The number one thing to be aware of is that the market could move either way. 

The post Bear vs Strong Bear: Choosing the right hedge for your portfolio appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) has tried and failed multiple times to make it higher than 6,200 points. Before the March correction, the index rose as high as 7,200 points. Even with the recent strong rally following those lows of around 4,400 points in March, we are still sitting low. In fact, we are still a full 1,000 points or more below this previous high. 

One thing to note here is the unique complexity that coronavirus has brought with it. We have never seen a crash exactly like this one. Although stock market crash events tend to have some similarities, each one is absolutely unique.

We are seeing a huge amount of stimulus from our governments and even the most experienced investors are struggling to come to a consensus on market direction. Keep this in mind when trying to 'predict' the market.

Everyone has an opinion, however I believe the best thing for investors to do is simply be prepared for all possibilities. 

Things to consider

The S&P/ASX 200 Index

The Index is not a single company. The ASX 200 is made up of the top 200 companies listed on the Australian Securities Exchange, by float-adjusted market capitalisation. So when you are looking at the 'ASX 200' falling or climbing, just remember that this doesn't mean individual shares will rise or fall.

Small cap shares for instance, may not move with the ASX 200. The media often refers to the market falling or rising by a number of points. This is generally related to the ASX 200 Index.

Understanding what the index means will allow you to make more informed decisions.

The 6,200 point barrier

Now we have discussed the ASX 200 makeup, we can look at the points again. While the top 200 companies represent less than 10% of companies listed, they are certainly very important. With this in mind, we come back to the 6,200 point barrier.

The index has made five attempts to break through this barrier between 9 June and 25 August. It's interesting because if we apply the same logic to an index that we do to a share price, multiple rejection is never good. Its shows a lack of strength and an inability to gain ground.

To me, breaking above this 6,200 point level is critical for positive change. 

Compounding this doubt is the fact that for the last 2 weeks, the index has been steadily trending down and away from that barrier, in retreat.

Business and life is evolving

The world is changing and evolving. What we know today, may not apply tomorrow. We are seeing changes in the way people work, the way companies operate and the way we live our lives. We are in the midst of a digital evolution and it's affecting the whole planet.

It's hard to imagine but, whilst we are seeing certain industries struck down by the pandemic, such as airlines, others, like technology providers are thriving. It's a shift and a flow of both money and energy. Although we see increasing unemployment among traditional jobs, at the same time, there are also many technology companies advertising for multiple roles to handle the new workload. It's a changing game.

On another note, this changing landscape is adjusting what we think we know about the financial health of companies. For example, recently Premier Investments Limited (ASX: PMV) announced that sales were down 18% globally.

Normally, this would be a shocking piece of news for investors, however the Premier share price rose 12%. The reason for this was that although sales were down, net profit was actually up. As most of the brands in Premier's portfolio are retailers, the physical shops have had to close for lock downs. However, online sales have surged, accounting for more than quarter of total sales. 

It's a different game.

The reality of share prices

We regularly see the financial media comment on the over or under valued nature of share prices all the time. Every analyst has an opinion and a methodology for valuing a company – myself included. However, there is one very important thing to remember: A company is not its share price.

We might see prices crash, but remember that the company could very well still be trading normally. You could see prices surging and when you look at the company, you find it's not even making a profit.

If a company is surging with no profit, is it 'overvalued'? Perhaps, however I would also argue that if two people, a buyer and a seller, agree on a price, then that company may not be over or undervalued. It may just be 'valued' correctly at the time of trade.

It's an interesting question and I'm not taking anything away from true valuations or fundamental analysis. In fact, I trust and rely on fundamentals myself, however it's worthwhile being aware of the reality of a real-time market, like the ASX. The share price is what a buyer is willing to pay, at the time.

How to handle a potential stock market crash

Have a plan

The first thing to think about is who you are as an investor. A financial advisor may be the best person to help you personally understand your goals and objectives. Having clarity around your goals will allow you operate with a clear mind in a crisis.

Some investors will lose sleep at night if they see shares in their portfolio falling in value. If this is you, have a plan. Know what you are going to do ahead of time. Know what you are happy holding and what you would prefer to sell. It's important to think about your portfolio and positions ahead of time. It's also important to know how to log into your trading account!

Long-term investors tend to view short-term corrections as nothing more than a blip on the radar. If this is you, a potential crash may not faze you too much. However, you can always improve your position. One strategy you might consider is dollar cost averaging. This involves keeping a supply of cash available to purchase more shares at lower prices later, should you need to.

Another reason for a long-term investor to keep some spare cash around is to be able to take advantage of buying opportunities quickly. In the March crash, investors had a matter of days at the bottom of the market. It's worth being prepared to act.

Risk management is key

Having a risk management mindset is a great way to operate in a stock market crash. Be aware of the risks involved in your positions and understand the potential losses. Even if you're not an analyst, you can refer to past events to understand the risks of your holdings.

One thing you can do right away is check out how low the prices went in March this year for all your holdings. In the event of another crash, it's likely the market could revisit previous levels and even lower. Having a look at previous prices can help you to understand the potential impact.

For example, Afterpay Ltd (ASX: APT) fell from over $40 to $8.90 in the March market crash, losing approximately 80% of its value. If that were to happen again at today's value of around $73 per share, an 80% drop would mean prices could dip below $15 per share. This is not a prediction, it's just basic risk management. If a major crash occurs, we can expect companies which were heavily impacted previously to be significantly impacted again.

If you consider risk management ahead of time, you will be able to consider the possibilities and make less emotional decisions. It's certainly helpful to think about.

Look at ways to hedge your portfolio

Selling shares at the first sign of a correction isn't always the best default move. Apart from the disruption to the portfolio you have worked so hard to build, there is also the tax implications to consider. This is something to discuss with your tax agent to really understand the repercussions of transactions. 

One possibility you have to help prepare for a market crash, aside from keeping spare cash for further investment, is to add hedging to you portfolio.

Companies showing resilience

One example of hedging is to purchase more companies that stand up well during a stock market crash. For example, large grocery companies such as Coles Group Ltd (ASX: COL) fell less than 20% in the March crash (compared to 80% with Afterpay). Another example is technology provider and artificial intelligence leader Appen Ltd (ASX: APX). Appen fell around 40% in March, however bounced back quickly and has gone on  exceed all previous highs. Lastly, healthcare giant CSL Limited (ASX: CSL) fell a mere 25% in March while most of the ASX was bleeding. It has held ground well since then. 

Negative correlation exchange traded funds

In a previous article, I wrote about three exchange-trade funds (ETFs) you can use to hedge your portfolio in a downturn. The purpose of a negative correlation ETF is to inversely track the direction of a regular index, such as the ASX 200.

For example, BetaShares Australian Equities Bear Hedge Fund (ASX: BEAR), which aims to produce returns that are negatively correlated to the returns of the ASX 200. If the ASX 200 moves -1%, BEAR can be expected to be positive +1%. As you can imagine, putting some extra cash into this ETF can help to offset the paper losses on the main portfolio, should you choose to hold your shares in a crash.

For investors with a little less cash, or even those looking to make a little profit on the way down, you could potentially look to a negative correlation ETF that is 'magnified'. BetaShares Australian Strong Bear Hedge Fund (ASX: BBOZ) is one such fund. BBOZ aims to produce magnified returns that are negatively correlated to the returns of the ASX 200. If the ASX 200 moves -1%, BBOZ can be expected to be positive +2.4%.

Foolish takeway

Facing the prospect of another stock market crash can be a little unnerving to say the least. However, being prepared, managing risk and looking for options to hedge your portfolio can really help. 

My suggestion is this, don't try to predict the market. Instead be prepared for all scenarios. Investing is what we love, so it doesn't make sense to stop doing it. What does make sense is preparation to ensure we can continue doing what we love well into the future.

A market crash is often required to keep the market healthy. Throughout history, the market has bounced back stronger and stronger each time. You can draw confidence that we will always recover, it's just a matter of time. Having a sense of awareness and being prepared can be the difference between panic and success. 

I hope this article has helped to guide you through the prospect of a potential crash. It's not that scary if we are ready for it! 

The post Is another stock market crash coming? appeared first on The Motley Fool Australia.

After a 10-year bull run, the year of the coronavirus will have taught many novice investors that the market can turn into a sea of blood very quickly.

But there is a way for investors to reap gains in a plunging market.

"Remember the Hollywood blockbuster 'The Big Short' where a bunch of investors made massive gains on the housing market crash?" Stake operations manager Sarhang Shafiq said.

"That's what it's all about – taking the 'short' or 'other' side of the market."

Traditionally, taking a "short" position was only available to professionals and sophisticated investors, as it would have required creating a margin CFD account or having a broker facilitate it. The risks were considered too much for the average retail punter.

These days, though, "inverse" exchange-traded funds (ETFs) have popped up to allow retail investors to easily take a contrarian position.

While they're not as abundant in the ASX as in the US, ETF provider Betashares has 3 local products available: Betashares Australian Equitiesbear Hedge Fund (ASX: BEAR), BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ), and Betashares US Strong Bear Hedge Fund ETF (ASX: BBUS).

These funds increase in value when the Australian or US market falls, and vice versa. 

The first one will rise roughly 1% for each 1% fall in the market, while the other 2 are leveraged to amplify the effect (about 2.4% for every 1% change in the market).

Betashares investment communications manager Richard Montgomery told The Motley Fool these products are for "experienced investors".

"These are not 'set and forget' investments – investors should keep an eye on their positions on a frequent basis."

Are inverse ETFs worth it?

Even though short trading is now very accessible through these ETFs, investors are warned to tread very carefully.

One big reason is that markets are expected to head upwards in the long term, so holding onto inverse ETFs for longer than necessary could result in losses.

That leads to the second question of when to purchase, and when to offload these shares.

"When would you decide to buy these potential hedging ideas? And when would you sell them to switch into shares?" said The Motley Fool's Tristan Harrison back in March, during the peak of the coronavirus panic selling.

"You could end up holding on too long to see the value fall again. You're having to make two calls which you could get wrong."

Montgomery warned that the Betashares products target negative market movements on a single given day.

"It's important to understand that the return over a period longer than one day will not necessarily fall within the target short exposure range, and that a Bear fund is not expected to hit a certain price at a specific index level based on previous performance.

"For this reason, the short funds are typically more suited to short-term strategies."

He also flagged the potential dangers of leveraged funds.

"There are the additional risks associated with gearing, which magnifies both gains and losses. Geared investments involve significantly higher risk than non-geared investments, and may not be suitable for all investors.

"An investment in a Bear fund should only be considered as a component of an investor's overall portfolio."

The post Are inverse ETFs risky or the best thing ever? appeared first on The Motley Fool Australia.

The ASX, along with international markets, has seen some amazing gains from its March lows to now, while the world suffers in the wake of the COVID-19 pandemic. The lack of market correlation to the state of the economy is a confusing notion. As an investor, it can be challenging to see the forest from the trees amid this unpredictability.

Even if you do expect further correction to occur in our market, selling your shares may not be your preference as this can result in paper losses (and gains) being realised. There is another way to protect yourself by using ASX ETFs as a hedge.

What is a hedge? 

While no one has a crystal ball, it can be comforting to know that you have options available to you if you want to hedge your ASX portfolio against the risk of further downturns. The concept of hedging is nothing new, but for those investors a little fresh to the game, here is one definition:

"A hedge is an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security." – Investopedia.com

Essentially, if you are holding ASX 200 listed companies and are planning to retain your holding through a downturn period, you could also invest in an ASX ETF that is negatively correlated to the S&P/ASX 200 Index (ASX: XJO). This means that if your holdings were to drop in value, your ETF position is likely to rise. To me it is simple – hedging your portfolio means you can sleep a little better at night.

3 ETFs to consider for a potential downturn

The following ETFs have been included as they directly relate to the Australian and American markets. As in investor, if you purely hold shares on the ASX, the first two are likely to be more relevant to you.

It should be noted that a significant number of 'negative correlation' ASX ETFs are available to retail investors. If you are considering this strategy, it is worth conducting further research to understand all available options.

Australian Equities Bear Hedge Fund (ASX: BEAR)

BEAR aims to produce returns that are negatively correlated to the returns of the ASX 200. If the ASX 200 moves -1%, BEAR can be expected to be positive +1%.

Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) 

BBOZ aims to produce magnified returns that are negatively correlated to the returns of the ASX 200. If the ASX 200 moves -1%, BBOZ can be expected to be positive +2.4%.

US Equities Strong Bear Hedge Fund (ASX: BBUS)

BBUS aims to produce magnified returns that negatively correlate to the returns of the S&P 500 Index, hedged to Australian dollars. If the S&P 500 moves +1%, BBUS can be expected to be negative -2.5%.

How to use these ETFs to hedge against a market correction

As an example, lets look at how we can hedge a $10,000 portfolio against another potential market correction. If you're concerned about a 10% fall in the market, you may wish to hedge 10% of your portfolio. In this case, you would purchase $1,000 worth of BEAR shares (standard negative correlation) or as little as $500 worth of BBOZ shares (magnified negative correlation)

The great thing about these ETFs is that you buy them the same way you buy shares on the ASX. This makes it extremely easy to hedge your portfolio quickly.

Now, you might be thinking that you could use these same ETFs to profit from a falling market, and you're right. While the context of this article is to discuss portfolio protection, it is possible that investing in bear market ETFs could also produce some profit when the market falls.

Foolish takeaway

Buying ETFs is no different to buying shares. Markets can certainly be confusing and 2020 takes the cake! Adding ETFs to your portfolio can offset some risk, provide profit in a falling market and maybe even help you sleep a little better at night.

The post 3 ASX ETFs to hedge your portfolio appeared first on The Motley Fool Australia.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has notched up another 2.55% gain to 5,339 points. That means since the start of the week, the ASX 200 has added 5.4%. And that comes on top of the 4.6% the ASX banked last week.

While most ASX investors would be rejoicing at this turn around of fortunes, there would be some investors gnashing their teeth right now.

I'm referring here to short-sellers – investors who bet against the market and profit when it falls. It's a strategy that's seen a lot of increased attention in recent weeks, for obvious reasons.

True short selling involves borrowing another investor's shares, selling them, and then buying back at a later date and returning the shares. It's a strategy that's traditionally only really available to institutional and 'sophisticated' investors – and far outside the reach of your average retail investor on the street.

But the rising popularity of exchange-traded funds has changed this paradigm.

One such ETF is the BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ).

This fund (readily available on the ASX) is a 'short ETF' – meaning it is structured in a way that allows its value to rise when the value of the ASX 200 falls. It's a 'short' for the average investor.

Now on the surface, this might appeal to many investors out there. But it might just be a whole lot more dangerous than it initially appears.

Firstly, this fund is not your typical ETF. It doesn't hold underlying stocks, rather a bunch of derivative contracts, which enable the fund to profit if the broader index falls in value. In this way, you have no real assets underneath as you might in a 'normal' ETF.

Secondly, it's not suitable for a long-term investment (in my view anyway). BetaShares makes it clear this ETF is 'reset' at the end of each trading day, which involves some value destruction. To illustrate, the fund has returned -9.79% per annum since its inception in April 2015. That compares with the ASX 200 returning 1.42% per annum over the same period. As you can see, the values don't correspond too well. Another thing to consider is its management fee of 1.38% per annum.

Foolish takeaway

I admit that some investors might find this ETF a useful one, but for me, the risks outweigh the potential rewards. For instance, over the last 2 weeks, the fund has lost significant value, all while the broader ASX 200 has recovered. This is not much more than a device that enables you to take a punt on what direction the markets might go next. So have a punt if you'd like, but don't expect better odds than flipping a coin!

The post As the ASX 200 continues its miraculous recovery, this popular bear market strategy is quickly unravelling appeared first on The Motley Fool Australia.

Now (in my opinion) those aren't especially concerning raw numbers. Dramatic changes in sentiment are always a little scary, but just going on numbers here, statistically, we aren't in 'bloodbath' territory (yet).

But that brings me to the (frankly deplorable) media coverage you often see around these sentiment changes. Headlines like 'bloodbath on global markets' and 'ASX wipes $3 trillion in day of market carnage' are deliberately designed to draw eyeballs by sensationalising moves on the stock market.

No one makes headlines saying 'trillions added' when stocks go up (which is what usually happens), just saying.

But it is still uncomfortable for investors watching the net worth of their portfolio go down on paper, absolutely.

So how does one invest in this kind of investing climate?

Well, if you're so inclined, you can try and invest in 'hedges'. There are many kinds of hedges. Some are asset-based, like gold or government bonds. These are easy to invest in with exchange traded funds (ETFs) like the BetaShares Gold Bullion ETF (ASX: QAU) or the iShares Treasury ETF (ASX: IGB).

Or there are inverse ETFs like the BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ). This kind of fund is built on a shorting strategy, so (in theory) will go up if the broader stock market falls. It's a more high-risk strategy, but one many investors dabble with.

Or (as I try to do myself), you can stick to the fundamentals and watch your favourite companies to see if they're on sale. If they are, go for it. If they're not, maybe get some cash together and wait.

For anyone thinking about selling your shares as a result of this red day on the markets, I'm sorry but in my opinion, the right time to sell for most stocks was last week when markets were at record highs. Selling in a panic is almost always an exercise in wealth destruction – ever heard of 'buy low, sell high'?

If investors were happy holding Wesfarmers Ltd (ASX: WES) shares last week at near $47, why anyone would be selling today at $42.60 is beyond me.

Foolish takeaway

Market gyrations can be scary, but I think if investors stick with their strategy and their goals, everything will be alright in the long run. Fool on!

The post How to invest in ASX shares this week appeared first on The Motley Fool Australia.

When (not if) a recession does come, it's very typical to see big, double-digit declines in stock prices across the board.

This is painful for most investors, but there are some ways to profit and make money in a recession-induced ocean of red. Here are two.

Short selling

Short selling involves borrowing shares from other investors, selling them and buying them back at a later date for a lower price and returning them to the lender while pocketing the difference. This is a highly risky strategy and most retail investors won't be able to short individual stocks themselves, but there are ETFs (exchange traded funds) out there that can offer you short exposure.

The BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) is one such option. BetaShares states that a "1% fall in the Australian share market on a given day can generally be expected to deliver a 2.0% to 2.75% increase in the value of the Fund (and vice versa)."

Thus, if the ASX enters a bear market, using this fund might help you to bank some profits in such a time. It is still a very risky game to play though, and not one I would personally use.

Holding cash

This is a far more common and (I think) productive way to make returns during a bear market. Cash is the safest investment to hold short-term and thus I always aim to keep a certain portion of my investable capital in cash to take advantage of a recession or bear market.

Of course, your cash won't make you money straight away. But if you keep your eye on some of the best ASX blue-chips during a downturn, chances are you will be able to pick up one or two at bargain basement prices and bank your profits when the bad times end. Just ask anyone who picked up shares of Wesfarmers Ltd (ASX: WES) in 2008 for around $10.

Foolish takeaway

Of these two methods to make money during a recession, I far prefer the second option. Viewing recessions and stock market crashes as opportunities rather than scary wealth destroying events is one of the best ways to ensure long-term wealth generation, in my view. If you're feeling crazy brave, by all means investigate short ETFs further, but I prefer to just hold cash and use it when there's blood in the streets.

The post How to profit during a recession appeared first on The Motley Fool Australia.

So the question for shorting is not if you can, it's if you should.

What is short selling?

Even if you haven't heard of shorting, if you have ever bought a share as an investment, you have already 'gone long'. Going long is another way of saying you're betting that a company's share price will rise (hence why you probably bought the share) but going short is the opposite. Short sellers are investors actively hoping that the share price of a company will go down.

It is done by an investor 'borrowing' shares from another investor (usually via a broker) with a promise to hand them back at a certain point. Once the shares have been borrowed, they are sold, and only bought back when the time comes to hand them back to the original owner. So a short-seller is hoping they can 'sell high and buy low' i.e. buy the shares back at a lower price they were sold for and pocket the difference.

Should you short sell?

The first thing to say is that although shorting can he highly lucrative, it is also very risky. Your potential losses are technically infinite, as a company's share price upside is theoretically unlimited (whereas the lowest it can go is zero if you are long). Another thing to note is although a company may be overvalued, there is no guarantee that it will return to its intrinsic value within your shorting timeframe. You might have to cover your short position a month before the share price plunges (and that won't feel nice at all).

Foolish takeaway

In my opinion, short selling is an investing strategy that long-term retail investors should stay away from. Although you might have made a lot of money shorting AMP Limited (ASX: AMP) or Bellamy's Australia Ltd (ASX: BAL) over the last 18 months, I think going long is just a better strategy and focuses on the best that the ASX can offer, rather than the worst.

The post What is short selling (and should you do it?) appeared first on The Motley Fool Australia.

But despite all this, there are still plenty of ways to protect your portfolio from a severe downturn in the economy. In fact, there are even some savvy investors who might find a way to turn a market correction into a money-making opportunity. Here are three ways you can reduce your portfolio volatility in a crisis, and possibly even still generate a positive return.

1. Inverse ETFs

Exchange traded funds (or ETFs) are pooled investment vehicles that trade on the stock exchange just like ordinary shares. Normally they are designed to passively track a benchmark or index, such as the overall performance of the top 50 or 100 companies listed on the ASX. The success of the fund is measured by how closely its performance replicates its chosen benchmark.

However, inverse ETFs are designed in such a way that they move in the opposite direction to their benchmarks. Betashares have a number of inverse ETFs that currently trade on the ASX, and they all bucked the downward trend on Thursday to deliver strong returns.

The Betashares Australian Equities Bear Hedge Fund (ASX: BEAR) is seeks to profit from a declining Australian share market by generating returns that are negatively correlated with the return of the ASX200.  It increased 2.7% on Thursday.

The Betashares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) is a riskier version of the standard Bear ETF as it uses leverage to magnify returns. It surged 6.8% higher in Thursday trading.

And for some international exposure, the US Equities Strong Bear Fund (ASX: BBUS) attempts to profit from declines in the US share market. It also jumped 6.5% higher on Thursday.

2. Gold

In times of market crisis, investors flock to safe haven assets like gold and other precious metals as these commodities tend to safeguard value. You can gain exposure to gold through gold ETFs such as ETFS Physical Gold (ASX: GOLD), or by investing in pure play gold miners.

The GOLD ETF increased by 1.2% on Thursday, while gold miners like St Barbara Limited (ASX: SBM), Evolution Mining Limited (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) also ended yesterday in the green.

3. Bond ETFs

Fixed income instruments like bonds are viewed as lower risk than equities. So when the share markets become volatile, risk-averse investors tend to dump their stocks and buy up bonds.

The easiest way for individual investors to trade in bonds is again through ETFs. There are loads of fixed income ETFs that currently trade on the ASX: same target higher yielding corporate bonds, while others focus on lower risk government debt.

For example, there is the Vanguard Australian Government Bond Index ETF (ASX: VGB), which does basically what it says on the tin: invests in lower risk government bonds. It also finished slightly in the green on Thursday.

Foolish takeaway

The above strategies can offer downside protection to your portfolio during times of market upheaval. But they are not without risk. When the share market is performing well, inverse ETFs will decline in value – and in the case of leveraged ETFs like Betashares Australian Equities Strong Bear Hedge Fund, these negative returns will be magnified.

However, these types of securities are great diversifiers, and if used in the context of an overall portfolio strategy they can help you rest a little easier when markets become volatile.

The post 3 ways to protect your ASX portfolio from a market correction appeared first on The Motley Fool Australia.

Many of us will be watching our portfolio balances with a sinking heart (or at least trying not to). But there are certain ways that investors can profit from a falling stock market. Here are two that are common 'hedging' strategies.

Buying gold

Gold is the ultimate safe haven asset, and investors seem to flock to it at any signs of trouble these days. Now before you get too hung up on the pros and cons of storing gold bars under your bed, consider the ETFS Physical Gold ETF (ASX: GOLD) instead. Buying units of this exchange traded fund (ETF) is the equivalent of buying a stake in physical gold bullion, which this ETF stores in a London bank vault.

You could also consider a gold mining company like Newcrest Mining Ltd (ASX: NCM). This is a slightly riskier option, but remember that mining companies own the gold that their mines hold (and Newcrest owns over $120 billion worth of gold at current prices). If you want something close to proof, Newcrest shares (along with the other gold miners) are up nearly 1% today despite the market carnage.

Inverse ETFs

Like the name suggests, there are ETFs out there that rise in value when the market falls. Take the BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) for instance. According to BetaShares, this ETF is designed so "a 1% fall in the Australian share market on a given day can generally be expected to deliver a 2.0% to 2.75% increase in the value of the Fund (and vice versa)".

ETFs such as this use leverage and short-selling to achieve this result – making them very risky vehicles to be playing with. But BBOZ is up 6% today alone, so it might be worth the risk if you're feeling crazy-brave.

Foolish takeaway

Both of these strategies can work if you use them correctly, but as a long-term investor, I personally just accept that share market fluctuations are part of the deal and try to buy more in these situations. If I had to pick, I would choose gold as a hedging route as I appreciate the underlying value of the yellow metal – Inverse ETFs are a little exotic for me personally.

The post 2 ways to profit from the ASX dropping appeared first on The Motley Fool Australia.