Short ETFs are becoming more and more commonplace. When I did actual short selling way back when, shorting was something most people had never heard of. I'm talking about folks who have a 401K or IRAs and don't care much about understanding how the markets work. I find that more and more people understand shorting these days especially with the relatively recent introduction of inverse ETFs. I have yet to put a penny into them, but have continued to watch them and keep them in the back of my mind as a consideration for my portfolio. As for now, I still prefer bearish option spreads instead of actual shorting.
Some of the benefits of inverse ETFs are:
1. You can short in a cash account. If you short stock, this requires a margin account, not so with short ETFs (or bearish debit spreads).
2. While the up tick rule has pretty much gone away, if it should come back, short ETFs are not subject to this rule. You're effectively going long on a short ETF as weird as that may sound.
3. Many short ETFs provide leverage. Typically 2x leverage and they're marketed as "ultra". There are also long "ultra" ETFs too, but from a percentage standpoint, this is much more prevelant in short ETFs.
The reason why I don't like them yet is because they're expensive relative to options. You can achieve the same short term protection with a bearish option spread. Of course, there are downsides to option spreads and if you're in short ETFs attempting to balance out volatility in your overall holdings, in other words, you're a long term holder of short ETFs, then options may not make quite as much sense.
Also, if you're bullish on the market, but want to protect some profits, it's doubtful that you want to be short an entire index. I like to open bearish positions on stocks that I feel are weak. If the ship sinks, I hope that my long positions will sink less and my bearish positions will sink more. This all sounds good in theory.
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