U.S. equities and stock exchange traded funds were moseying along during most of August but experienced a precipitous plunge in the later half of the month after volatility in China and an unclear Federal Reserve policy outlook triggered a market correction.
Over August, the Dow Jones Industrial Average fell 6.6%, the Nasdaq Composite decreased 7.0% and the S&P 500 dropped 6.3%.
The best performing non-leveraged ETFs over the past month include the C-Tracks on Citi Volatility Index ETN (NYSEArca: CVOL) up 89.3%, ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) up 67.7% and iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) up 67.6%.
During the initial plunge in the equities market, the CBOE Volatility Index, a measure of the fear in the market place, surged past 51, a level not reached since the financial crisis, reports Callie Bost for Bloomberg.
“Seeing the VIX at 50 was just chaotic,” Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co., told Bloomberg. “It’s not like there was a headline that a bank had filed for bankruptcy or a major corporation was teetering on the brink. Why did it move that much?”
The VIX now sits at about 31.9, which is still much higher than its low range of 12 to 13 through earlier this year. The VIX has historically fallen between 15 and 20.
The worst performing non-leveraged exchange traded products over the past month include the Market Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT) down 22.6%, Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS) down 22.1% and Market Vectors Solar Energy ETF (NYSEArca: KWT) down 20.4%.