Latest news with #VIXY
Yahoo
2 days ago
- Business
- Yahoo
QDWN, VIXY Among ETFs Posting Biggest Declines in May 2025
Exchange-traded funds utilizing options strategies and volatility exposure led May's worst-performers among non-leveraged funds, with the DailyDelta Q100 Downside Option Strategy ETF (QDWN) falling the most at 43%, according to FactSet data. With $192,500 in assets under management, QDWN pursues short-term bearish bets on the Nasdaq-100 Index through put options purchases, according to FactSet. The actively managed strategy seeks capital appreciation while limiting single-day risk to 10% or less of net asset value. Posting the second-worst performance is the YieldMax Short COIN Option Income Strategy ETF (FIAT), which declined 33%, according to FactSet. Holding $49.8 million in assets, the fund aims to provide current income and inverse exposure to Coinbase Global, Inc. (COIN) stock through a synthetic covered put strategy. Volatility-focused products also struggled during May. Both the ProShares VIX Short-Term Futures ETF (VIXY) and iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) declined 27%, according to FactSet data. Tracking futures contracts on the CBOE Volatility Index with average one-month maturity, the VIXY fund holds $129.7 million in assets. With $389.3 million in assets, the VXX product provides similar short-term VIX futures exposure but operates as an exchange-traded note rather than a traditional ETF structure, according to FactSet. Worst-Performing ETFs of May 2025—Source: FactSet The YieldMax Short N100 Option Income Strategy ETF (YQQQ) posted a 13% loss, according to FactSet. With $11.7 million in assets, the fund employs a synthetic covered put strategy targeting inverse exposure to the Nasdaq-100 Index while generating monthly income. Rounding out the top five decliners is the WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN), which declined 10%, according to FactSet. This $36.6 million actively-managed fund provides concentrated exposure to gold through both mining company equities and U.S.-listed gold futures contracts. Mining-focused ETFs continued the decline pattern as the iShares MSCI Global Silver Miners ETF (SLVP) fell 9%, according to FactSet. Holding $282.9 million in assets, the fund tracks a market-cap-weighted index of global companies that earn the majority of their revenues from silver mining. Multiple funds tied at 8% declines. Through an actively managed market-neutral strategy, the AGF U.S. Market Neutral Anti-Beta Fund (BTAL) takes long positions in low-beta U.S. stocks offset by short positions in high-beta stocks, with $318.6 million in assets. Natural gas exposure also hurt performance as the United States Natural Gas Fund LP (UNG) fell 8%, according to FactSet. With $363.3 million in assets, the fund holds near-month futures contracts in natural gas delivered at Henry Hub, Louisiana, rolling expiring contracts to maintain front-month exposure. Automated trading strategies struggled as the TradersAI Large Cap Equity & Cash ETF (HFSP) posted an 8% decline, according to FactSet. With $848,200 in assets, the fund uses proprietary algorithms with human oversight to trade S&P 500 Index e-mini futures positions based on intraday price movements. Completing the worst-performers list is the Themes Gold Miners ETF (AUMI), which also lost 8%, according to FactSet. With $10.4 million in assets, the fund tracks a market-cap-weighted index of the 30 largest gold-mining companies | © Copyright 2025 All rights reserved
Forbes
18-04-2025
- Business
- Forbes
The Best Ways To Profit From, And Safeguard Against, Market Volatility
In a year when the stock market has primarily been driven by the whims of President Donald Trump's tariff policies and social media posts, it's even harder than usual to forecast whether the market will move up or down in the next week, or even a year where the stock market has primarily been driven by the whims of President Donald Trump's tariff policies and social media posts, it's even harder than usual to forecast whether the market will move up or down in the next week, or even day. The S&P 500 index crashed 10% in a two-day span after Trump's already infamous press conference announcing his 'Liberation Day' reciprocal tariffs on 90 countries on April 2, then rallied 9.5% a week later when he backtracked on most of them. The index is still down 14% from its record high in February and 10% year-to-date. The Chicago Board Options Exchange's Volatility Index, known as the VIX, measures the expected forward-looking volatility of the S&P 500 and is currently at a historically high level of 30. That effectively means that traders expect the S&P 500 to move 30% in either direction in the next 12 months—a value less than 20 would be typical in a more normal, stable environment. Last week, before Trump announced the pause in tariffs, the VIX spiked above 50 for only the third time in the last 20 years, joining the October through December 2008 Financial Crisis levels and the onset of the global pandemic in March 2020. All of these spikes have corresponded with market crashes, branding the VIX as a fear gauge. For lucky passive investors, with iron constitutions, the previous instances have turned out to be great opportunities to simply buy stocks. But for more advanced market players typically use options to hedge their bets, there are VIX-focused funds that could be attractive short-term options. There is no way to invest directly in the CBOE's VIX, but Bethesda, Maryland asset manager Proshares offers an exchange traded fund known as the VIX Short-Term Futures ETF (VIXY), which buys short-term call options on the VIX. It is up 44% since April 2. Proshares also offers the Short VIX Short-Term Futures ETF (SXVY) which shorts the VIX, betting that volatility will go down. Because the VIX and the stock market generally move in opposite directions, though not always, VIXY tends to behave similarly to an S&P 500 put option, betting the market will fall, and SXVY behaves similarly to the inverse, a call option betting that stocks will rise. 'When the VIX does what it just did, buying options is two to four times more expensive. All of a sudden, those of us who like to buy puts and calls on major indexes are now fighting with one hand behind our back,' says Rob Isbitts, the founder of Sungarden Investment Publishing, describing how the VIX is derived from the prices of S&P 500 options—a VIX of 30 means options are double the price of when the VIX is 15.. 'Maybe 5% or 10% of the time over the next several years, I would use VIXY and SVXY, but this is one of those times.' Proshares puts a disclaimer on both of these ETFs that they're intended for short-term use and investors should monitor their investments as frequently as daily, and there's good reason for that. The VIX moves so jaggedly that any profits can be short-lived, and over the long-term, most of these options will expire out of the money and losses are all but guaranteed. For investors wanting to smooth out stocks' rockiness in a single fund, some firms blend volatility protection with a more diversified portfolio of stocks. Chicago-based Equity Armor Investments manages $171 million in assets in funds like its Rational Equity Armor Fund (HDCAX), which invests primarily in dividend-paying companies in the S&P 500 and also invests up to 20% of its assets in VIX futures contracts. It has a model to determine which options are cheap or expensive and avoid the natural decay associated with rolling VIX options, says co-portfolio manager and chief trading officer Joe Tigay. He portrays the fund as an alternative to balanced 60/40 portfolios, now that bonds haven't acted as a hedge on stock exposure this year the way they often have in the past. Tigay says the fund typically has about 15% of its assets in its volatility strategy and 85% in stocks, and that can vary depending on the market. When the VIX spikes, the fund can move some of its profits from those options into stocks to smooth out the return, and when stocks rise, VIX futures in turn get cheaper. That helped make its maximum drawdown in 2020 a 15% loss, when the S&P 500 crashed 34%. Its five-year annualized return of 7.1% underperforms the S&P 500's 14% mark, but beats the Morningstar Moderately Conservative risk index it benchmarks to by three percentage points. So far in 2025, it's down 4.8%. 'When there's a lot of volatility, it's not scary, it's actionable, and it allows us to maneuver in the market,' says Tigay. 'It's a built-in sell-high, buy-low strategy.' Plenty of funds also offer covered call strategies which cap upside by selling out of the money call options on an index but offer a buffer against declines by distributing income from these options. The largest is JPMorgan's Equity Premium Income ETF, which has $37 billion in assets and offers an 8.2% yield. But Isbitts cautions that those haven't been tested in prolonged bear markets and prefers buying put options directly for protection against individual stock holdings. 'What good is getting the income if you're effectively paying yourself with stock losses,' says Isbitts. 'If we have an extended bear market, covered call ETFs will be remembered as the investment that everybody loved because they did not realize what could possibly go wrong.'
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
