Smart But Dangerous Product
One product on the list that is distinct from the rest is the ProShares Short VIX Short-Term Futures ETF (SVXY), which is up a whopping 82% year-to-date. While the other nine ETFs can be considered replacements for actively managed equity funds, SVXY is in a class of its own because it uses derivatives.
"SVXY is a smart product," Balchunas said. "It turns roll costs into yield, which has helped it clean up in this low-volatility market. But we've seen cases where the short-volatility trade can go down 20-30% in a day or week."
Bring Your Own Assets
Another interesting product that Balchunas points out is the Legg Mason Low Volatility High Dividend ETF (LVHD).
"LVHD is an example of 'BYOA'―bring your own assets," explained Balchunas. He says that a lot of the inflows into ETF products from Legg Mason, Goldman Sachs, J.P. Morgan and Fidelity may be from existing clients of those firms.
"Even though these issuers have bright futures, a lot of the assets you see in their products are current clients who may have thought of leaving a mutual fund and going to a competitor, but instead simply moved over into one of the firm's ETFs," he noted.
Out of all the ETFs on the list, LVHD has the smallest year-to-date return, at 8.3%. Gains for the rest range from 16% to 82%, as can be seen from the table below:
Contact Sumit Roy at [email protected]