Bear market funds are designed to profit when the market or sector they follow declines. Bear Market Funds make money in declining markets, as opposed to Bull Market Funds.
If you’re bearish on a sector, industry, commodity, the market, or anything else that’s tradable, rest assured that you’ll find a Bear Market Fund for it. There are also 2X Bear Market Funds, 3X Bear Market Funds, etc…, which use margin, short-selling, and derivative instruments to acquire large leveraged positions.
The highly leveraged funds are only really meant to be held for a day or so. ETFs with similar structure may be more advantageous to the investor since they can trade intra-day.
What is a Bear Market?
What is a Bear Squeeze?
What are the Basics of Options?