Shorting The VIX
Eleven of the 15 names on the all-time list are leveraged products, but that still leaves four that aren't. The ProShares Short VIX Short-Term Futures ETF (SVXY) and the VelocityShares Daily Inverse VIX Short-term ETN (XIV) are two of those, with lifetime returns of 1,893% and 992%, respectively.
SVXY launched almost a year after XIV, which was a better time to establish a short position on the CBOE Volatility Index (VIX). Both products more than doubled this year alone as volatility has dropped to shockingly low levels.
If you strip out the leveraged products, SVXY and XIV are at the top of the heap. If you go further and strip out the inverse products too, that leaves you with just two ETFs.
SPY Makes The List
One of those exchange-traded funds, believe it or not, is the most famous ETF of all, the SPDR S&P 500 ETF Trust (SPY). Launched on Jan. 22, 1993, SPY has risen 828.3% since its inception. The other is a close cousin, the SPDR S&P Midcap 400 ETF Trust (MDY), with a 1,131% gain since its launch in 1995.
These two funds are on the all-time list in large part thanks to their age.
"MDY and SPY are up there simply because they're old," said Balchunas. "They've been around since the '90s, and longevity really helps with returns, especially if it's an equity ETF."
He also added that "it's nice to see midcaps get attention because everyone forgets about them" and that "once you erase the leveraged and inverse ETFs, MDY is No. 1."
One curious observation about the ETFs on the all-time list is that most of them aren't very popular. With the obvious exception of SPY and MDY, the other 13 products on the list have assets under management ranging from $36 million to $2 billion.
Should investors be taking a closer look at these red-hot ETFs?
According to Balchunas, the answer is no: "These are power tools. You could argue that the fact that they don't have a lot of assets is a good thing and it shows that highly dangerous ETFs are largely isolated to the trading community."
Balchunas says that if you bought any of these products now, they could go in the opposite direction in a hurry: "These are the ETFs your mother warned you about.”
"Those leveraged ETFs probably won't be at the top long. The whole list minus MDY and SPY is very fragile, but it's fun to look at," he concluded.
Contact Sumit Roy at [email protected]