There's a consideration, though, with any inverse ETFs, that makes them dangerous to hold as anything other than a short-term bet against a market. These fund are typically rebalanced daily (CHAD included) so investors should remember that it can underperform its stated objective if held for longer than a day.
The managers of inverse ETFs use a variety of strategies, including derivatives and shorting stocks, to meet their objectives. If the underlying stocks fall, these inverse ETFs will appreciate and the next day, the managers would have to sell more stocks at lower prices. On the other hand, if underlying stocks go up, inverse ETFs will have to reduce their short exposure by maybe buying stocks at higher prices. This could lead to underperformance.
The Securities and Exchange Commission provides some real-life examples of how extreme this underperformance can be. (The agency recently undertook a new proposed rule-making to limit inverse and leveraged ETFs.)
Misra said as long as investors understand this quirk, CHAD and other inverse China ETFs could still be viable hedging options for short-term periods like a few days, even though they would provide less than a perfect hedge.
There's a more fundamental concern some ETF experts have — investors attempting to time the market at all.
"If China and emerging markets bounce back, so will China ETFs or even funds that track the oil sector. So small investors are usually best off picking ETFs that check important boxes in their asset-alllocation plans and watching out for fees," said Ben Johnson, Morningstar's global director of ETF research.
— Additional reporting by Timothy Mullaney and Joe D'Allegro, special to CNBC.com