ProShares Rolls Out Two More VIX ETFs

October 04, 2011

ProShares doubles the size of its VIX ETN lineup to four, with a double-exposure and a short fund.

ProShares, the world’s biggest purveyor of leveraged and inverse exchange-traded funds, rolled out more VIX futures-related ETFs Tuesday, one with double exposure and the other inverse, bringing to four the number of strategies it has on the market that provide exposure to futures contracts linked to the CBOW Volatility Index, or VIX, the market’s leading measure of volatility.

The new strategies are:

  • ProShares Ultra VIX Short-Term Futures ETF (NYSEArca: UVXY), which provides double the daily exposure to its underlying index.
  • ProShares Short VIX Short-Term Futures ETF (NYSEArca: SVXY), which provides single inverse exposure to its underlying index.

 

On its website, Bethesda, Md.-based ProShares calls itself the only purveyor of VIX futures ETFs, distinguishing itself from exchange-traded note providers such as iPath and VelocityShares that offer investors exposure to the VIX, but in an ETN wrapper. The largest of those competing products, the iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX), has just over $1 billion in assets.

VIX products aren’t meant for long-term holding. They are tactical products, regarded as portfolio insurance of sorts that gain in value when the S&P 500 falls sharply, hence the VIX’s nickname, the “Fear Index.”

Both new ProShares funds have annual expense ratios of 0.95 percent, the usual fee on ProShares products.

Like many inverse or leverage products, the new ProShares funds are rebalanced daily, which means returns of the funds can differ significantly over time from those of their underlying indexes. Such funds are therefore only appropriate for sophisticated investors who are willing and able to closely monitor their investments.

The two new funds join the ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) and the VIX Mid-Term Futures ETF (NYSEArca: VIXM), which the company brought to market in early January of this year.

 

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