They're nice for regular folks looking to buy an array of stocks and bonds. Nirvana for professional bears looking to bet against them.

Scads of traders, hedge funds and other professional money managers are using exchange-traded mutual funds, or ETFs, to bet on a plunge by swaths of the stock or bond markets, or just slivers of one or the other.

So-called short-selling activity in ETFs offers a peek at where many pros are most bearish -- these days it is small stocks, real estate and bonds. It also shows how ETFs, billed as a better mouse trap for small investors than traditional mutual funds, are just as appealing to the Big Money crowd.

Like other index-tracking funds, ETFs offer individuals a cheap way to own baskets of stocks or bonds. But unlike regular mutual funds, ETFs trade on an exchange just like a stock and price all day long. That is the attraction for bearish traders or money managers, who can "short" them -- selling borrowed ETF shares and profiting by returning the shares later once their price has fallen. ETFs can even be sold short at the moment that their price is falling; investors aren't allowed to do that with individual stocks.

It isn't possible to precisely break down activity by professional and individual investors, but individuals' tendency not to short, as well as the difficulty in borrowing a modest number of shares to do so, means ETF shorting is largely professional territory.

Deborah Fuhr, an ETF strategist for Morgan Stanley in London, says the number of money-management firms world-wide owning ETFs was 1,571 in June, up from 448 in 2000, according to an annual survey she conducts.

Of the 10 largest ETFs by assets, more than 20 percent of their shares were accounted for by short-sellers through the middle of this month, according to ETF Consultants LLC in Summit, N.J. By way of comparison, short sales typically comprise 1 percent to 2 percent of the average stock's shares outstanding.

One of the most popular ETFs -- the $49 billion Standard & Poor's Depositary Receipts, tracking the S&P 500-stock index -- has about 30 percent of its shares sold short. And shorts accounted for 45 percent of the nearly $20 billion Nasdaq-100 Index Tracking Stock.

These two ETFs were often traded by Samuel Israel III at Bayou Management LLC, according to the fund's reports to investors. Bayou is under investigation for fraud by state and federal authorities, but the probes aren't related in any way to Mr. Israel's use of ETFs. Several hedge funds are listed among the biggest players in ETFs.

Pros are even more skeptical about niches of the stock market, other ETF trading shows: Short sales of the $7.4 billion iShares Russell 2000 Fund added up to 73 percent of its shares, according to ETF Consultants. The fund tracks an index of 2,000 companies with market values below $1.8 billion. These so-called small-cap stocks are on pace to outperform shares of larger companies for the seventh straight year, but the ETF shorts suggest the pros think this rally is long in the tooth.

And short sales account for more than 106 percent of the $1.2 billion Dow Jones Real Estate fund's shares. Short-sell percentages can rise above 100 percent of a fund's shares outstanding, because one share can be borrowed and sold several times. Elsewhere, for instance, short sales of the $874 million iShares Lehman 20+ Year Treasury Bond Fund added up to 136 percent of the fund's shares outstanding this month, down from 255 percent in mid-July. The implication: Pros are betting rising interest rates will harm bonds.

In recent years, Legg Mason portfolio manager Bill Miller has shorted the Nasdaq 100 Trust when he believed tech stocks were overvalued. Late last year, he closed out a Nasdaq 100 short position in the firm's $3.4 billion Opportunity fund.

It isn't all bearish bets by the pros. Hersh Cohen and Scott Glasser, co-managers of the Smith Barney Appreciation Fund, have been both buyers and sellers in ETFs in the past few years. When tech stocks were peaking, they shorted the Nasdaq 100-Index Tracking shares, and more recently they have taken a position in the iShares MSCI Japan Index Fund. The ETF was handy, the managers say, because it allowed them to play a hunch in Japan without having to pin their hopes to just one or two companies.

"I wanted to be in Japan, because I think it's incredibly cheap," Mr. Cohen says, "but I don't know individual stocks in Japan."