Barclays, the investment banking division of U.K.-based Barclays Bank PLC, today rolled out the first inverse exchange-traded note(ETN) tied to VIX volatility futures. Is this a sing of the times?
The rollout of the Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN (NYSEArca: XXV) is the third VIX ETN in Barclays’ stable. Like the others, this ETN is a play on the the “fear index,” which tends to rise when market volatility increases and represents the expectation of that volatility over the next 30 days.
XXV is the inverse of iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX). [VIX ETNs Have Their Moment.]
Brendon Conway for The Wall Street Journal reports that the VIX managed to add just 4.4% on Friday as the S&P 500 plunged nearly 3%. This suggests that at least in the near term, investors are not expecting wild swings in the market. Futures, though, might be indicating that investors expect volatility later on. [Playing Market Volatility with ETFs.]
For more stories about volatility, visit our VIX category.
The other VIX ETNs in the lineup are:
- iPath S&P 500 VIX Mid-Term Futures ETN (NYSEArca: VXZ): VXZ has been one of the top performers in recent months, up 9.1% in the last month alone.
- iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX): VXX has not fared as well, down 3.3% in the same time frame.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.