This is an inverse product designed to track the daily returns of the S&P 500 Index in the opposite direction. Using derivative contracts, futures, and similar instruments, it aims to gain value by the corresponding amount when the index falls.

It suits investors who expect the market to decline, or who want to defend their stock portfolio against short-term downside risk.

Launched by ProShares in 2006, it is a passively managed (index-tracking) ETF.

To track the exact opposite of the S&P 500's daily moves, the fund rebalances its portfolio every day. Instead of short-selling stocks directly, it uses financial derivatives to build inverse exposure.

• A structure that generates profit immediately when the market falls
• A simpler way to respond to a falling market than traditional short selling

Assets under management (AUM) stand at $937.9M, and the expense ratio is 0.88% per year.

In bull markets when the S&P 500 rises, the fund posts continued losses, but when the market plunges or enters a bear phase, its asset value rises and it works as a hedge.

When market volatility increases or warning signs of a decline appear, hedging demand drives greater inflows, and short-term trading flows are very active.

It is a useful defensive tool during market declines, but investors should be wary of the negative effects of compounding when held for the long term (negative compounding).

SDS and SPXU shown in the table each offer aggressive inverse exposure, while SH is an inverse product with relatively lower volatility. If you expect the Nasdaq market to fall, you can consider PSQ or SQQQ, and if you want to bet on a downturn in the semiconductor industry, thematic inverse products such as SOXS are also worth reviewing. If you believe in the long-term rise of the index, long ETFs such as SPY or VOO are the basic choice, but SH is useful when you want to manage short-term downside volatility.

This is an essential checklist to review before deciding to invest in SH. You should carefully examine whether the unique structure of an inverse product matches your own investment objectives.

Inverse ETFs carry a high risk of losing value over time, so they should be used strictly for short-term risk management or bets on a decline rather than for long-term investing.

It is an appropriate tool if you expect a short-term drop in the S&P 500 or need portfolio insurance. However, it requires a precise understanding of the product's characteristics and the skill to respond nimbly to market conditions.