BetaShares Australian Equities Bear Hedge Fund

I was reading Tony Featherstone’s article last week about the Beta Bear EFF, as it can be used as insurance against a fall in the market. What I can’t get my mind around is how many ETF’s I need to buy to protect my share portfolio.

As an example, if I have a portfolio worth $1.000,000, how many Bear ETF’s do I  need? Based on the presumption the EFF will go up 1% if the market drops 1%. I think they’re in the $16 region at the moment.

 
Thanks for your help.

A: Thanks for the question.

Based on the last price of BEAR of $14.55, to fully protect a $1,000,000 portfolio, you would need to buy $1,000,000/$14.55 units – approx. 68,700 units..

Management fees on this product aren’t that cheap (at approx. 1.35% pa), plus the bid/offer spread, so you would want to have a pretty high conviction to invest in this.

Hope this help

Regards


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