Volatility ETF Overview

Volatility ETFs are popular trading products. These products are linked to volatility futures. They own or short futures based on the CBOE Volatility Index (VIX). The VIX index portrays the price volatility embedded in the option prices of the S&P 500 Index for the next 30 days.

Investors need to understand that these funds track the futures on the VIX, not VIX itself. Because of the nature of the VIX futures markets, the rolling cost of futures may be detrimental to performance results. Thus, these products may lose money over the long term. Investors need to approach these products with care.

With 12 ETFs traded in the U.S. markets, Volatility ETFs gather total assets under management of $2.82B. The average expense ratio is 1.16%. Volatility ETFs can be found in the following asset classes:

  • Alternatives

The largest Volatility ETF is the VelocityShares Daily 2x VIX Short-Term ETN TVIX with $787.38M in assets. In the last trailing year, the best performing Volatility ETF was the SVXY at 293.61%. The most-recent ETF launched in the Volatility space was the iPath Series B S&P 500 VIX Short Term Futures ETN VXX in 01/17/18.

Volatility UNIVERSITY

ETF.com Live Chat!

Live Chat: Dissecting Tracking Error & 'QQQ'

Dave Nadig answers readers' ETF questions in real time. Here’s the transcript.

Daily ETF Watch

Hedging ETF Debuts

New fund allows investors to hedge interest rate, inflation risk.

Index Investor Corner

Swedroe: Trend Following As Insurance

Allocations to trend-following strategies can help protect a portfolio during severe downturns.

ETF.com Live Chat!

Live Chat: China Tariff Impact, How To Buy ETFs

Dave Nadig answers readers' ETF questions in real time. Here’s the transcript.

Daily ETF Watch

ETF Week: Vanguard Cuts Fees On 21 ETFs

Plus, two volatility ETNs switch tickers and six ETFs close.

Index Investor Corner

Swedroe: Active Impacts Returns & Volatility

The lower active share is a sign of closet indexing, which raises the hurdle for generating alpha.

Daily ETF Watch

Volatility ETNs Change Tickers

Plus, two new biblical smart beta ETFs debut, while several VanEck and First Trust ETFs get a price shake-up.

Index Investor Corner

Swedroe: Variance Risk Premium Evidence

Why the VRP is important and how investors can access it.

ETF Strategist Corner

Prime Time For Low Vol ETFs

Lower-volatility ETFs can boost returns in a slower growth environment.