The Best Inverse ETFs in Canada for March 2025

ByDan Kent Published On:

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        Key takeaways

        Hedging Against Market Declines – These ETFs allow investors to profit from falling markets, offering both standard (-1x) and leveraged (-2x) bearish exposure.

        Short-Term Trading Instruments – Due to daily resets and potential compounding effects, they are best suited for short-term tactical positions rather than long-term holdings.

        Diverse Market Coverage – Investors can hedge against the S&P 500, TSX 60, and NASDAQ-100, with options for leveraged and non-leveraged bearish exposure.

        One ETF I like way better than the ones on this list.

        For active traders looking to predict market trends, or even for long-haul Canadian ETFs investors aiming to benefit from temporary swings in price, inverse Canadian ETFs present a solid choice.

        However, make no mistake about it, I am not advocating for anyone to buy these ETFs. In fact, most investors should stay far away from them. But, if you have the risk tolerance and are also doing so with a bit of speculative capital, these ETFs do provide a very easy avenue to potentially benefit from price declines.

        What is an inverse ETF?

        The idea of an inverse ETF is that it will do the opposite of the movement of the underlying asset.

        For example, if we were dealing with S&P 500 ETFs, if you believe the S&P 500 is going to fall, you may buy an inverse ETF that tracks the S&P 500. If the S&P 500 did fall, the ETF would do the opposite and go up.

        If you’re buying an inverse ETF, the objective would be to hold the ETF for a short time and profit from the opposite movements of the underlying index or stock the ETF tracks.

        Is it a good idea to buy an inverse ETF?

        That depends on one’s investment objectives and strategies. If you’re looking to buy an inverse ETF and hold it for an extended period, then no, you shouldn’t buy one.

        These exchange-traded funds are designed to be held for a short time. If held for the long term, there is a good chance you will lose money. This gets even further amplified with leveraged inverse ETFs like 2x or 3x.

        A 3X inverse ETF would be a leveraged inverse ETF that aims to expose an investor to 3 times the movements of the underlying stock or index it tracks. For example, if the S&P 500 goes down by 2.5%, someone with a 3X inverse ETF would realize gains of 7.5%.

        These ETFs are highly volatile and extremely high risk, particularly when one trades on margin. You must know what you are buying and understand the risks.

        If you are a long-term investor, inverse ETFs serve little purpose in that portion of your portfolio. They’re more so utilized with speculative capital, banking on short-term pricing movements.

        How do inverse ETFs work?

        Inverse ETFs use an asset class called a “derivative.” A derivative fluctuates in value based on the value of underlying asset it tracks. A quick example would be a call option on Tesla, or a futures contract on the price of crude oil or natural gas within commodities ETFs.

        The funds can structure their portfolios with these derivatives to benefit from downward movements in price.

        If you’ve decided you’re looking to speculate a bit on downward movements in price and it fits within your risk tolerance, here are some of the best inverse ETFs in Canada.

        What is the Best Inverse ETF in Canada?

        Conservative hedge against the S&P 500

        BetaPro S&P 500 Daily Inverse ETF (SPXI.TO)

        SPXI.TO provides -1x daily inverse exposure to the S&P 500, making it a defensive tool for investors looking to protect against U.S. stock market declines.

        • Effective Hedge Against U.S. Market Downturns – Useful for those seeking protection against S&P 500 volatility without leverage risks.
        • Lower Risk Compared to Leveraged Alternatives – Avoids compounding losses from multiple down days.
        • No Margin or Short Selling Required – More accessible for retail investors compared to direct shorting.
        • Federal Reserve Interest Rate Policy – Rising rates could pressure equities.
        • Corporate Earnings Performance – Weak earnings reports could drive the S&P 500 lower.
        • Stock Market Rebounds – Sudden rallies in the S&P 500 could lead to quick losses.
        • Time Decay Over Long Periods – Not designed for long-term bearish positions.

        High-risk, high-reward bearish S&P 500 play

        BetaPro S&P 500 -2x Daily Bear ETF (SPXD.TO)

        SPXD.TO provides -2x daily leveraged exposure to the S&P 500, offering amplified returns for traders betting on U.S. market declines.

        • Greater Profit Potential in Bear Markets – If the S&P 500 drops 1%, SPXD.TO aims to rise 2%, making it attractive for aggressive traders.
        • More Efficient Than Direct Short Selling – No margin requirements or borrowing fees.
        • Best for Short-Term Tactical Trades – Ideal for day traders or short-term investors looking to capitalize on market corrections.
        • Macroeconomic Headwinds – Inflation and slowing GDP growth could weaken U.S. stocks.
        • Tech Sector Volatility – The S&P 500’s heavy exposure to tech makes it sensitive to earnings reports and regulatory shifts.
        • Leverage Decay Over Time – Daily resets can cause performance to diverge from expected long-term returns.
        • Extreme Market Volatility – Sharp rebounds in the S&P 500 could lead to rapid losses.

        Hedge against Canadian blue-chip stocks

        BetaPro S&P/TSX 60 Daily Inverse ETF (CNDI.TO)

        CNDI.TO provides -1x inverse daily exposure to the S&P/TSX 60, allowing investors to profit from declines in Canada’s largest companies.

        • Protection Against Canadian Market Downturns – Helps hedge against TSX 60 weakness, particularly in financials and energy.
        • Less Risky Than Leveraged Options – Suitable for more conservative hedging strategies.
        • Better Alternative to Direct Short Selling – Offers inverse exposure without requiring margin accounts.
        • Oil Price Fluctuations – The TSX 60 is heavily weighted toward energy stocks.
        • Banking Sector Risks – Rising interest rates and mortgage concerns could impact Canadian financials.
        • Market Recovery Risks – If Canadian equities rebound, the ETF will lose value.
        • Sector-Specific Volatility – TSX 60 composition makes it vulnerable to energy and banking trends.

        Amplified downside exposure to Canadian markets

        BetaPro S&P/TSX 60 -2x Daily Bear ETF (CNDD.TO)

        CNDD.TO provides -2x daily leveraged exposure to the S&P/TSX 60, making it an aggressive short-term trading tool for investors betting on Canadian market declines.

        • Double Leverage for Enhanced Returns – If the TSX 60 declines 1%, CNDD.TO aims to rise 2%, making it ideal for tactical trades.
        • Best for Volatile Market Conditions – Maximizes profit potential when markets decline rapidly.
        • More Capital-Efficient Than Margin Shorting – Avoids borrowing costs and capital constraints of shorting stocks.
        • Canadian Real Estate Market Weakness – Mortgage concerns and higher interest rates could pressure financial stocks.
        • Oil Market Uncertainty – If crude prices drop, the energy-heavy TSX 60 could decline sharply.
        • Leverage Amplifies Losses – A market rally could lead to steep declines in CNDD.TO.
        • Not Suitable for Long-Term Holding – Due to daily resets, long-term performance may not match expectations.

        Aggressive bet against U.S. tech stocks

        BetaPro NASDAQ-100 -2x Daily Bear ETF (QQD.TO & QQD.U)

        QQD.TO (CAD) and QQD.U (USD) provide -2x daily leveraged inverse exposure to the NASDAQ-100, targeting bearish moves in major technology companies.

        • Leverages Weakness in High-Growth Stocks – Tech stocks are particularly vulnerable to rising interest rates and economic slowdowns.
        • Profits from NASDAQ-100 Sell-Offs – If the index declines, this ETF delivers amplified returns.
        • Dual Currency Offering for Flexibility – Investors can choose between CAD (QQD.TO) and USD (QQD.U) depending on currency preferences.
        • Federal Reserve Rate Decisions – Higher interest rates typically weigh on tech stock valuations.
        • Earnings Season Volatility – NASDAQ-100 companies, especially in AI and semiconductors, can experience sharp price swings post-earnings.
        • Tech Sector Resilience – If major companies like Apple, Microsoft, or Nvidia post strong earnings, the NASDAQ-100 could rally.
        • Compounding & Leverage Risks – Over multiple days, the fund’s returns may not align perfectly with expectations due to daily resets.

        Short crude oil with leverage

        Global X BetaPro Crude Oil Inversed Leveraged Daily Bear ETF (TSE:HOD)

        HOD provides -2x daily inverse exposure to crude oil prices, helping traders capitalize on falling energy markets.

        • Direct Play Against Oil Prices – Profits from declining WTI crude prices.
        • Useful During Economic Slowdowns – Oil demand weakens when economies contract.
        • Energy Supply & Demand Risks – A supply glut or OPEC miscalculations can pressure prices lower.
        • OPEC+ Production Policies – Decisions on supply cuts or hikes impact crude prices.
        • Global Demand Shifts – China’s economic slowdown or recession fears can drive oil lower.
        • Oil Market Volatility – Geopolitical tensions can create sharp rebounds.
        • Contango Risks – Futures-based ETFs may experience performance drag.

        First inverse Bitcoin ETF in Canada

        Global X BetaPro Inverse Bitcoin ETF (TSE:BITI)

        BITI offers inverse (-1x) daily exposure to Bitcoin prices, designed for traders looking to short the cryptocurrency market.

        • Profits from Bitcoin Sell-Offs – If crypto markets crash, BITI gains value.
        • Lower Risk Than Leverage-Based Crypto Shorts – No need for futures or margin trading.
        • Useful in Crypto Bear Markets – Allows traditional investors to hedge Bitcoin exposure.
        • Regulatory Crackdowns – Government intervention could trigger Bitcoin sell-offs.
        • Crypto Adoption Cycles – Weak demand for Bitcoin often signals downtrends.
        • Crypto Volatility – Bitcoin can have sharp rebounds that wipe out gains.
        • Long-Term Holding Risks – As with other inverse ETFs, not ideal for prolonged exposure.

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