BEAR: Australian Equities Bear Hedge Fund


Purchase date: 9/05/2017

Price: $15.10

There has been an increasing number of news stories, professional opinions and commentary coming to light over the past couple of months warning of another potential market correction (a fall in the value of the market). The timing of this correction is still uncertain, but it made us think – what can we do in our portfolio that will give us some sort of protection if this correction does come.

We came across and Exchange Traded Fund (ETF) called Australian Bear Hedge Fund or ASC code BEAR. The term ‘bear’ is used to explain a market that is trending down, where share prices are falling, and there is encouragement to sell.

BEAR is a great stock to consider having because it is negatively correlated to the marker. In other words, it is designed so that when the market goes down, the price of BEAR goes up. BEAR aims to “provide investors with a simple way to profit from, or protect against, a declining Australian sharemarket. It seeks to generate returns that are negatively correlated to the returns of the Australian sharemarket (as measured by the S&P/ASX 200 Accumulation index)”.

This is not a stock that you would put a lot of cash into and have sitting in your portfolio if the market was in good spirits and growing nicely, but it is something that you can have at your disposal for when the market turns. Equity Mates are feeling that it is a good time to have a small exposure to this in our portfolio, and that’s why we’re going to include it. Having said that – if our attitude towards the market changes, then we will remove this from the portfolio, as we see fit.

It’s also worth mentioning that as of this trade we will be changing brokers. Previously we were using CMC who charge $11.95 per trade, however we are switching to IG, who charge $8 per trade. There is no point paying more for what is essentially the same service.

Episode 11 we discuss BEAR

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