Also known by the nickname "The Footsie," FTSE 100 is the benchmark index for the London Stock Exchange (LSE) and is often a gauge for the health of the U.K.'s economy. The global market watches the index closely, and it often influences early U.S. market sentiment since it opens five hours before the New York Stock Exchange (NYSE). The index experienced high volatility after the Brexit referendum on June 23, 2016, during which the U.K. voted to leave the European Union. Investors expect more volatility as the Brexit date of March 29, 2019, approaches and heated negotiations continue.
Investors looking to short the FTSE 100 may want to buy into an inverse exchange-traded fund (ETF), or a fund that rises when the FTSE 100 falls. Inverse ETFs to short the FTSE include the Xtrackers FTSE 100 Short Daily Swap UCITS ETF (LON: XUKS), the L&G FTSE 100 Super Short Strategy Daily 2X UCITS ETF (LON: SUK2) and the ETFS 3x Daily Short FTSE 100 ETF (LON: UK3S). The information presented here was current as of Oct. 4, 2018.
Xtrackers FTSE 100 Short Daily Swap UCITS ETF (LON: XUKS)
The Xtrackers FTSE 100 Short Daily Swap UCITS ETF, launched in June 2008, seeks to replicate the performance of the FTSE 100 Short Index, which rises when the FTSE 100 Index falls. The ETF is designed to track the index on a daily basis, so it's not ideal for long-term investment.
XUKS has £22.64 million, or $29.47, in net assets and a dividend yield of 4.01%. The fund attempts to achieve its objective by investing in transferable securities and uses derivative techniques from time to time, such as index swap agreements. It invests the net proceeds of its shares in over-the-counter (OTC) swap transactions, exchanging the invested proceeds against the index’s performance.
L&G FTSE 100 Super Short Strategy Daily 2X UCITS ETF (LON: SUK2)
The L&G FTSE 100 Super Short Strategy Daily 2X UCITS ETF began trading in June 2009. The fund's objective is to mirror the FTSE 100 Daily Super Short Strategy Index, which inversely mirrors the daily exposure of the FTSE 100 Total Return Declared Dividend Index by a factor of two. That means if the FTSE 100 Total Return Declared Dividend Index falls 2% in a day, the SUK2 should rise 4% plus interest earned on proceeds from the sale of the index portfolio before fees and adjustments. SUK2 has net assets of £17.9 million, or $23.30.
ETFS 3x Daily Short FTSE 100 ETF (LON: UK3S)
The ETFS 3x Daily Short FTSE 100 ETF seeks to track the FTSE 100 Daily Ultra Short Strategy RT Gross TR Index. Formed in April 2014, the ETF provides three times the inverse exposure to the FTSE 100 Total Return Index. For example, if the FTSE 100 Total Return Index decreased by 2%, the ETF and its tracked index would increase by 6% before fees and adjustments.
UK3S has £10.77 million, or $14.02 million, in net assets. The fund is structured as a debt security instead of a security, or share, and can be redeemed on demand by authorized participants.