Latest news with #ProSharesVIXShort-TermFuturesETF
Yahoo
03-04-2025
- Business
- Yahoo
Trump Tariffs Sends VIXY Soaring, ETFs Broadly Slump
Markets slumped Thursday, leaving investors few places to hide as President Donald Trump announced retaliatory tariffs. Economic uncertainty and investor fear sent the ProShares VIX Short-Term Futures ETF (VIXY) soaring in early trading, rising nearly 20%. VIXY represents the Cboe Volatility Index (VIX), often dubbed the market's "fear index." Among broad market ETFs, the SPDR Dow Jones Industrial Average ETF Trust (DIA) dropped nearly 3.5% in early trading, while the SPDR S&P 500 ETF Trust (SPY) slipped close to 4%. During a speech from the White House on Wednesday, the president announced broad sweeping tariffs on all imports into the United States. Declaring a "national emergency" caused by "foreign trade and economic practices," the president announced a 10% baseline tariff on all countries. While investors hoped tariffs would be narrow in scope, the president also announced individualized tariffs on countries with which the White House says the U.S. has the largest trade deficits. Those tariffs, Trump said, would amount to roughly 50% of the existing taxes those countries impose on the U.S., according to the administration. India is set to be slapped with a 26% tariff, while the European Union will face a 20% tariff. China's tariffs are set to 34%, and the United Kingdom 10%. One of the biggest tariffs on the list is Vietnam, whose exports will see a 46% tariff. The VanEck Vietnam ETF (VNM) fell by more than 11% on Thursday. Retailers offering toys, clothes and furniture will see prices rise as Vietnamese exports are set to be slammed by the tariffs. Shares of Nike (NKE), which produces goods in the Southeast Asian country, slumped by over 12%. Tariffs are largely expected to raise prices for the American consumer as manufacturers pass on tariff costs to buyers. The Consumer Discretionary Select Sector SPDR Fund (XLY) dropped on the tariff news as investors anticipated consumers would rein in spending once they face higher prices of goods. Retail ETFs also sank. The SPDR S&P Retail ETF (XRT) dropped by 9%, dragged down by companies like Carvana (CVNA), which fell more than 19% Thursday. While used-car sellers should ultimately benefit from Trump's tariffs, the market selloff was felt almost everywhere. But opportunities can still be found amid the economic uncertainty. The iShares 20+ Year Treasury Bond ETF (TLT) jumped by more than 1% as long-term bond prices rose as investors fled risk-on assets. But not all typical "safe haven" investment strategies were working Thursday. The SPDR Gold Trust (GLD) wobbled on the tariff news, despite posting a more than 19% gain since the start of the year, as Trump tariff headlines have hit the | © Copyright 2025 All rights reserved Sign in to access your portfolio
Yahoo
28-03-2025
- Business
- Yahoo
Why Fearful Investors Shouldn't Take the VIXY ETF Bait
You've probably heard of the VIX Index before—it's often referred to as the market's 'fear gauge,' a symbolic barometer for uncertainty in the stock market. If you're a more seasoned investor, you may have tried investing in one of its indirect proxies: the ProShares VIX Short-Term Futures ETF (VIXY). But here's the thing: the VIX isn't something to be traded casually or opportunistically. It's usually better used as a signal or a tool rather than a trade or an investment. Easily identify stocks' risks and opportunities. Discover stocks' market position with detailed competitor analyses. I'm bearish on VIXY over the long term. It's designed in a way that makes it almost certain to decline in value over time. Even in the short term, I don't expect much—either more of the same slow drift downward or, at best, flatlining while reassuring unnecessarily frightened investors. Let's unpack what the VIX index and VIXY ETF are really doing. The VIX measures the market's expectations for volatility over the next thirty days based on options pricing mathematically tied to the S&P 500 (SPY). When traders are nervous about what might happen in the market—whether it's inflation, earnings surprises, or geopolitical risks—they buy options to mitigate risk (hedge) in their positions. Such options become progressively more expensive, which drives the VIX higher. When the VIX rises, it means fear is rising because investors are happy to pay higher premiums to protect against the downside. When the VIX is low, markets are calm because investors feel less need to insure against market turbulence. Notably, the VIX index doesn't say anything about the market's direction. It doesn't tell you if prices are about to go up or down—only how turbulent the ride might be. That's a key distinction a lot of new investors miss. A high VIX means traders expect big moves, but not necessarily downward ones. Enter VIXY, the ProShares VIX Short-Term Futures ETF. This isn't a product that tracks the VIX directly. Instead, it holds futures contracts—essentially short-term bets on where the VIX is going next. So, while it tends to move in the same general direction as the VIX, the relationship isn't one-to-one. When the VIX surges, VIXY typically rises as well, but it lags. And when things are calm? VIXY tends to bleed out slowly. That's thanks to something called 'roll cost'. The ETF keeps swapping out old futures contracts for newer ones, which includes fees to roll the position from one contract month to the next, with newer contracts tending to be more expensive. That cost gets passed on to the ETF's value, and over time, it adds up. At best, VIXY is not a long-term investment in a balanced portfolio. It's not something investors should buy and hold with aspirations of appreciation over time. VIXY is a tactical tool rather than an outright investment. It shines in moments of panic—think of sudden geopolitical shocks, black swan events, or market-wide sell-offs. When fear spikes, VIXY can act as a lucrative hedge, jumping up quickly and softening the blow to your broader portfolio. But—and it's a big but—when market fear recedes, VIXY almost always gives back those gains. And then some. Even in years when volatility was unusually high—take August 2024, for example—VIXY ended the year in the red. That's because markets eventually calmed down while that persistent rolling cost ate away at VIXY's net value. In a low-volatility market, VIXY is like a tire with a slow puncture. So, unless you're managing risk over very short bursts, VIXY doesn't really have a place in a traditional portfolio. It's not a core asset. It's more like an umbrella: priceless during a storm but rather counterproductive at all other times. VIXY is currently trading at around $45 per share. That's a steep drop from $55 earlier this month and from $90 in mid-2024. Clearly, the market has settled down somewhat since then. The fear around tariffs, which drove the earlier March spike, seems to have eased. According to ProShares, the VIXY's current holdings are split between CBOE VIX Futures with April and May expirations. VIXY holds 66% of its holdings (5,249 contracts) in the April 2025 future for a notional value of $98.9 million and 34% (2,624 contracts) in the May future for a value of $50.2 million. In total, VIXY's market value stands at $149.15 million. Looking at the broader VIX Index, it's now hovering around 18.5. That's not high. In fact, it's pretty normal. It suggests that investors, broadly speaking, are feeling reasonably calm about the current economic conditions—despite what the headlines might be saying. For perspective, during the COVID-19 market panic, the VIX hit around 80. During the peak of the 2008 financial crisis, it also hit around 80. Compared to those numbers, 18.5 is tranquil. Still, it's essential to recognize the VIX's limitations. It doesn't forecast future volatility—it reflects current expectations. On the flip side, Mandy Xu, Head of Derivatives Market Intelligence at the Chicago Board Options Exchange (CBOT), recently suggested that today's ultra-low volatility might signify complacency. In her view, investors may underestimate risk. That's a fair point—and historically, periods of low volatility have often preceded sharp corrections. But I disagree with this outlook. I think the Trump administration has a firm grasp of the macroeconomic picture. With leaders like Scott Bessent serving as U.S. Treasury Secretary, I believe a strong fiscal hand is at the wheel. The recent market jitters were mostly about tariffs; even companies like Tesla (TSLA) have advised caution. But that narrative seems to be softening. I see conditions turning favorable for interest rate cuts from the Federal Reserve in the second half of 2025 and early 2026. That would likely trigger a rally in equities, not a sell-off. If you're eyeing VIX or VIXY right now, my stance is simple: don't take the bait. Buying into VIXY means betting that things will get worse—fast. With a macro view that considers not just market fundamentals but also policy, geopolitics, and sentiment, I believe the risk-reward balance is tilted in favor of risk-on market behavior and, therefore, bullish equities. VIXY isn't a buy here. It's a signal—one that says investors are breathing easier. And that, in turn, sets the stage for potential stock gains. Investors should resist the urge to fight the calm and instead prepare for the next leg of the current bull market. Disclosure Disclaimer & DisclosureReport an Issue
Yahoo
12-03-2025
- Business
- Yahoo
Poll: Investors 'More Likely' to Buy ETFs Amid Volatile Market
An poll finds that market volatility isn't turning investors sour on the markets. Instead, it's inspiring them to buy ETFs. Just over 50% of readers polled said market volatility makes them "more likely" to invest in ETFs, compared to just 9% that said they would be less likely. Source: poll A large number—39%—said that the market's down days aren't impacting their decision to buy, suggesting that many investors are staying the course in their portfolios. Current market volatility could prove a buying opportunity. Legendary investor Warren Buffett—the Oracle of Omaha—once famously said to get greedy when others are fearful. The ProShares VIX Short-Term Futures ETF (VIXY) has jumped more than 16% over the past month as broad market funds have remained under pressure. VIXY tracks the CBOE Volatility Index (VIX), also known as the market's "fear gauge." Last week, the S&P 500 had its worst trading week since September. The SPDR S&P 500 ETF Trust (SPY) dropped more than 3% from the prior Friday. Investors pulled $3.8 billion from the fund during that same time. Over the past month, the fund's performance has dipped by more than 4% as trade war fatigue and the back-and-forth on tariffs have caused markets to whipsaw. Despite poll respondents showing that they're more interested in investing in ETFs during market turbulence, fund flows data show that investors at scale haven't yet followed suit. Total market flows for last week totaled just $11.7 billion, according to data. The numbers are a large step down from the week prior when investors poured $49.6 billion into ETFs. While investors added more than $4.5 billion to equity ETFs last week, fixed-income ETFs raked in nearly $7.8 billion as uncertainty in the markets caused investors to turn away from risk. The iShares 20+ Year Treasury Bond ETF (TLT) pulled in the most out of any fund on Friday, bringing in just over $1 | © Copyright 2025 All rights reserved
Yahoo
06-03-2025
- Business
- Yahoo
Tariff Fears Send Key Volatility ETF Soaring
Investors are growing increasingly fearful of a prolonged trade war as key trading partners Canada, Mexico and China respond to U.S. tariffs with retaliatory levies on U.S. goods. These worries translated into rising volatility in financial markets, as measured by the CBOE Volatility Index (VIX) and the ProShares VIX Short-Term Futures ETF (VIXY). Both have surged in recent sessions as investors brace for potential economic disruptions tied to trade policy uncertainty. After a 30-day delay, President Trump implemented 25% tariffs on imports from Canada and Mexico on Tuesday. Additionally, he introduced a second round of 10% tariffs on Chinese goods, raising overall tariffs on China to 20%. In response, Canada swiftly retaliated with a broad set of counter-tariffs on U.S. products, some taking effect immediately. Meanwhile, China imposed duties of up to 15% on U.S. agricultural exports and introduced trade restrictions. The VIXY exchange-traded fund, which holds futures contracts to track the S&P 500 VIX Short-Term Futures Index, spiked to its highest level in 2025, as fears of a prolonged trade war have sparked concerns about declining consumer sentiment, slowing economic growth, increased inflation and corporate profit declines. The VIX index, commonly referred to as the market's "fear gauge," measures expected volatility in the S&P 500 over the next 30 days. It rises when investors anticipate greater market turbulence, typically due to geopolitical risks, economic uncertainty or financial instability. The VIXY ETF provides exposure to VIX futures, allowing investors to hedge against market volatility or speculate on rising fear levels. Unlike the VIX index, which is not directly investable, VIXY tracks short-term VIX futures contracts, making it a popular vehicle for traders looking to profit from market uncertainty. Tip: For further research and analysis, see list of volatility ETFs. The recent jump in the VIX index and VIXY ETF can be attributed to several key factors: Tariff Uncertainty and Trade War Fears: Investors fear higher tariffs on Canada, Mexico and China could lead to retaliatory measures, disrupting supply chains and hurting corporate earnings. Rising import costs could fuel inflation, complicating the Federal Reserve's policy decisions. Market Volatility and Investor Sentiment: The S&P 500 and other major indices have experienced sharp swings, with investors rotating into defensive assets such as gold and Treasury bonds. Earnings uncertainty among multinational corporations has contributed to increased market jitters. Federal Reserve and Interest Rate Expectations: If tariffs drive inflation higher, the Fed may delay expected rate cuts or even signal a more hawkish stance, unsettling investors. Higher rates tend to weigh on stocks, exacerbating market volatility and boosting the VIX. Market watchers are closely monitoring developments in U.S. trade policy, with many fearing tariffs could escalate into a prolonged economic conflict. If trade tensions continue to rise, the VIX index and VIXY ETF could remain elevated as investors seek protection against downside risks. Conversely, if policymakers reach diplomatic solutions or ease trade restrictions, market confidence could improve, bringing volatility back down. However, with global growth already slowing and inflationary pressures lingering, volatility may persist in the near term. Investors should stay informed and consider risk management strategies to navigate these turbulent times. Volatility ETFs like VIXY tend to be volatile themselves, as they can spike in any direction, and they are not intended for long-term | © Copyright 2025 All rights reserved Sign in to access your portfolio
