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This paper investigates whether inverse exchange-traded fund (ETF) trading can predict future negative underlying index returns. Using inverse ETF’s turnover rates and price volatilities to represent trading activities, this paper discovers that inverse ETF trading is significantly and positively related to future index returns and infers that the trading of inverse ETFs may not reflect informed pessimistic trading and cannot convey a bearish signal to the market. The trading activities in inverse ETFs do provide information about future index returns, yet what they reflect may be a lagging or less-informed bearish signal