Stocks prices are up amid a two-year-old equities rally. So is demand for exchange-traded funds (ETFs) that predict that rally to end.
ETFs that bet against further stock-market gains are among the fastest-growing fund class in the $1.1 trillion ETF industry, CNBC is reporting.
Known as "inverse" ETFs, these funds can pay double or triple the opposite move of the benchmarks that they track, growing 16 percent in assets this year, against 4 percent for the industry as a whole.
|NYSE floor traders.
(Getty Images photo)
"Traders do seem to be increasingly worried that the lot labeled 'U.S. stocks' may be ready for a mass exodus, as money flows into ETF volatility plays and inverse hedges are solidly higher in the recent week and month," Nick Colas, chief market strategist at ConvergEx in New York, writes in a note to clients, CNBC reports.
Many Americans aren't confident over the fate of the U.S. economy.
"The average U.S. consumer is still worried about the future," says Kathy Boyle, president of Chapin Hill Advisors in New York.
Federal Reserve officials admit that the economy is still shaking off the fallout from the Great Recession.
The Fed has lowered its growth estimate for 2011 to between 3.1 percent and 3.3 percent from a January forecast of 3.4 percent to 3.9 percent.
"The pace of improvement is still quite slow and we are digging ourselves out of a very, very deep hole," says Fed Chairman Ben Bernanke, according to Reuters.
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