In recent times, inverse ETFs have been very popular. This is due to the fact that no margin account need to be use to purchase these. Unlike traditional way of shorting, one cannot lost more than the principal in investing in inverse ETFs. Unfortunately the inverse ETFs met a setback last year. Popular inverse ETFs like Proshares distributed huge capital gains. On 22 December 2008, Proshares announced distributions for 35 of its 76 ETFs. Some of the figures are huge. For example, the Ultrashort Industrials had a distribution equivalent of 44.3% of its NAV. This amount is taxable. For Singapore residents investing in such an ETFs, if my understanding is correct, he will be tax 30% of the distribution as withholding tax on dividends. Therefore the guy who invested in this ETF on 21 Dec 2008, will find that he made an immediate lost on 22 December 2008 of 44.3%*30%=13.3% due to tax alone! See article here for a clearer explanation: Huge Distributions At ProShares