JPMorgan Chase Launches New ETN Betting on Volatility
Investors looking to short futures tied to the market’s 'fear gauge' now have a new way to do so via Inverse VIX Short-Term Futures ETNs (VYLD).
Last week, JPMorgan Chase launched its Inverse VIX Short-Term Futures ETNs (VYLD), which seeks to provide exposure to the daily returns of an index shorting futures tied to the Cboe Volatility Index (also known as the VIX).
The new product is designed to increase 1% for every point decrease that VIX futures experience. In short, investors could benefit from market volatility subsiding.
The Risk of ETNs
Exchange-traded notes have been out of fashion for a while, Bryan Armour, director of passive strategies research for North America at Morningstar, told etf.com. “Broadly, ETNs have a bloody history for investors because they tend to be house leveraged and inverse strategies.”
Part of that history includes the inverse VIX ETNs that blew up during 2018’s “volmageddon,” when the VIX increased over 100% in a single trading day causing inverse VIX ETNs to lose over 90% of their value, Armour said.
But JPMorgan designed this product to perform like the daily points change of VIX futures rather than the percentage change, resulting in lower volatility for the ETN and significantly less risk of succumbing to another “volmageddon” scenario. It also means less upside, since positive returns will also be smaller than the percentage change of VIX futures, according to Armour.
JPMorgan Chase did not immediately respond to etf.com’s request for comment.
The Opportunity for Investors
Markets have experienced turmoil recently due to concerns around tariffs and the potential of an economic recession.
“In 2025, it is likely we will see more equity volatility relative to 2024, which was a benign year in terms of volatility,” Aniket Ullal, head of ETF research at CFRA Research, told etf.com. “This launch is likely in response to expectations that volatility will be higher this year.”
However, while the new product expands the products available, Ullal said investors need to be aware that returns for future-based products can be impacted by roll costs as the fund rolls between futures contracts.
Many investors may also not need this type of exposure.
“Generally, the VIX goes down when the stock market goes up and vice versa,” Armour said. ”This product’s reliance on points-based change rather than a percentage-based change makes it complicated to use as a hedge for some other short exposure. It’s safer than short-VIX predecessors, but its use cases are limited as a result.”
