SVXY Is Suddenly The Largest VIX-Linked ETP, As Inverse Volatility Bets Roll In

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August 31, 2017 12:27pm NYSE:SVXY

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Would you believe that VXX (iPath S&P 500 VIX Short-Term Futures ETN, Expense Ratio 0.89%, $1.35 billion in AUM) is no longer the largest “Volatility” based ETP in the U.S. listed marketplace, at least for the moment?


We have commented on several occasions the inflows that we have seen in the past several weeks in “Inverse Volatility” linked SVXY (ProShares Short VIX Short-Term Futures ETF, Expense Ratio 0.83%, $1.36 billion in AUM) and competing fund XIV (VelocityShares Daily Inverse VIX Short-Term ETN, Expense Ratio 1.35%, $1.18 billion in AUM), and this recent trend has helped propel SVXY to asset size supremacy in the space, at least in the very short-term.

Of course since these funds are all designed as short-term oriented, trading/hedging vehicles, this all could change in a New York minute if there is an inflow here or an outflow there and VXX could easily retain its spot at the top in terms of AUM size.

Anyone whom even peripherally follows this space likely realizes by now that the VIX (Volatility Index) and itself and VIX futures linked funds like the ones mentioned above are far from the same beast, but one cannot watch and potentially trade one without at least paying attention to what is going on with the others (i.e. are VIX futures in contango as usual or in those rare, very rare moments of backwardation).

The latent three-day rally in global equities that began on Tuesday during an initial sell-off turned “dip buy” opportunity has caused the SPX to surge as high as 2470 in recent trading after spending nine trading sessions under its 50 day MA (which is presently 2451.72). This in turn has caused Volatility Indices like the VIX for example to plunge as we once again see a VIX today with a $10 handle only eleven trading days removed from when it was above $15. SVXY for example is trading at its highest levels since the mid-August global equity sell-off and corresponding rise in the VIX and as we mentioned above, significant inflows and outflows in the short-term in any of these funds is very possible, and could reverse at any moment (although we have pointed out steady inflows in VXX over time in spite of the fund continuing to create new all-time lows thanks to the effects of contango in the VIX futures market).

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The ProShares Short VIX Short-Term Futures ETF (NYSE:SVXY) was trading at $79.11 per share on Thursday afternoon, up $1.11 (+1.42%). Year-to-date, SVXY has gained 73.91%, versus a 11.60% rise in the benchmark S&P 500 index during the same period.

SVXY currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #2 of 6 ETFs in the Inverse Volatility ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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