In stock trading, funds that generate profits when stock prices fall are called inverse funds or reverse funds. These funds are designed to move in the opposite direction of the underlying index or asset they track. In stock communities, they are commonly referred to simply as “inverse.”

Inverse funds can be found in both index funds and ETFs. The basic profit structure of these funds involves short-selling index futures, which allows them to capitalize on declining markets. Additionally, there are ways to invest directly in inverse ETFs. For those looking to amplify their gains (or losses), leveraged inverse products are available, which multiply the returns by a specified factor. These products are commonly referred to as “double inverse” funds because they aim to provide twice the inverse of the index’s performance.

It’s important to note that specific names of ETF products often include the brand names of the asset management companies that handle them. For instance, Hanwha Asset Management uses the brand name ‘ARIRANG,’ while Samsung Asset Management and Mirae Asset Global Investments use ‘KODEX’ and ‘TIGER,’ respectively. For example, KODEX Inverse is an inverse ETF managed by Samsung. Unlike regular stock ETFs, these derivative-based products are subject to a substantial tax of 15.4% on gains.

Nowadays, similar short-selling and leveraged trading options are also available on cryptocurrency exchanges for assets like Bitcoin. This allows traders to profit from declines in the value of cryptocurrencies, mirroring the strategies used in traditional stock markets.

The COVID-19 pandemic, which caused a massive stock market crash in 2020, led to heightened market volatility. This scenario prompted many investors to seek quick gains through inverse funds. The increased popularity of these funds during this period led to their frequent appearance in the news and on trending search lists. In various stock communities, the term “boarding the bus” became a popular meme for purchasing inverse funds, playing on the word “inverse.”

Overall, inverse and leveraged funds offer unique opportunities for investors to profit from market declines, but they come with increased risks and complexities. As such, they are best suited for experienced investors who understand the nuances of these financial instruments.