Comparative Performance of VIX-based ETFs

A few weeks ago I held a webinar for subscribers where I discussed VIX-based ETFs. I examined the performance of several of the ETFs. I also presented ideas on how they could be traded as an alternative to a standard index trade, and under what conditions doing so might be appropriate. Below is a chart from the presentation. It shows the performance returns of the SPX, VIX, and a few of the more popular VIX-based ETFs. I have updated the chart through 4/14/11. It goes back to 11/30/10, which was the first day that XIV was available to trade.

(Click on chart to enlarge)

A few quick observations:

1) XXV is a product that is "supposed" to act as an inverse of VXX. It seems to do a horrible job of that. Instead it has almost exactly matched SPX performance. I can't imagine ever wanting to trade something that matches SPX performance, but carries greater risk. XXV is useless.

2) VXX has been a poor long-term performer. (I discuss reasons in the video.) TVIX will likely suffer long-term as well. If you are buying for a short-term trade, then TVIX looks like a decent high-powered alternative to VXX.

3) XIV appears to be a nice alternative to a short VXX or a long XXV position.


More detailed insights are in the video. If you would like to view it, you can gain access by signing up for a free 1-week trial subscription.  (Then check out the educational videos section of the members site.)

Also, for a more complete list of VIX-based ETFs and some great information, I’d recommend visiting Bill Luby’s VIX and More blog.