Comment Re:Coming soon: EEETFTFTFs! (Score 4, Interesting) 40
The exchange-traded fund is borrowing money and using that to leverage the short, either by doubling up on trades or something similar synthetically with options contracts. Either way, they have negative carry, because they involve leverage there is a cost of doing business that is a negative on every day you hold that asset.
There are few cases where you'd want to use these over doing the same action yourself, and usually the reason people use them is because they're not allowed for whatever reason to do the direct action themselves. Ultimately, steer clear of them unless you know what you're doing, and if you know what you're doing you don't need my advice.