The fund seeks to provide investment results that match, before fees and expenses, the inverse (opposite) of the daily performance of the benchmark index by investing in companies in the United States.
The investment process starts with a list of companies in the benchmark index and the research team utilizes quantitative techniques and fundamental analysis to identify investment opportunities.
Next, the research team seeks to engage in short sales of securities included in the underlying index and investing to a significant extent in derivative instruments, which primarily consist of equity index swaps and swaps on exchange-traded funds, futures contracts, and options on securities, futures contracts, and stock indices.
The team also may invest in American Depositary Receipts to gain inverse exposure to international companies included in the underlying index.
Then the manager constructs a portfolio of stocks from a list of companies favored by the research team and allocates capital based on its conviction level.
The fund will invest a significant portion of its net assets in financial instruments with economic characteristics that should perform opposite to the securities of companies included in the underlying index.
Also, the fund is non-diversified and, therefore, may invest a greater percentage of its net assets in a particular issuer in comparison to a diversified fund.