The short copper ETF belongs to the largest classes of ETFs and is perhaps one of the most complicated ones. This variety of ETF deals with short selling commodities. The latter is the process of selling stocks or commodities on the basis that the prices will go down before you sell. In here you borrow stocks from a brokerage house on the basis of an agreement to purchase at a future date. If the stock you have chosen is worth $200, and you borrow that stock and sell it at $200, when you pay for the shares at a market value of $180, you earn $120 per share.
This new copper ETF has recently gained a bad reputation because of manipulating stock and commodity prices, in the wake of the copper price boom and bust, and the stock market crash. This is more than slightly deceitful because short selling has long been a hedging strategy against drops in asset portfolio prices.
Many advisers have stated that traded products that enable investors to short markets are highly dangerous and they have given investors a warning that there is a large chance that they may never recover from losses they incur. IFAs who make use of different exchange trade funds and exchange trade commodities have said that these are potentially damaging and shorting should never become part of mainstream asset allocation. Other people say that these can possibly erode the capitals of investors entirely. In here, time is not on your side and you might never get the opportunity to stand back up from the damage done by a short ETF.
In making use of short ETFs you are effectively making two calls specifically, you are stating that the market will never go up, and you are saying that the market will drop down. This therefore increases the risks for clients.