Even though VXX is one of the worst-performing exchange traded products over the last three years, the ETN has seen $4.8 billion of inflows during the period. [Investors Buy Worst-Performing ETFs]
“Sophisticated investors with long-term outlooks could use this fund to partially hedge their portfolios against future downturns but must first understand the unusual mechanics of this exotic vehicle,” Morningstar says in an analyst report on VXX. “Volatility futures have a large negative roll yield in steady markets, so the insurance provided by this fund can be very costly even if volatility remains constant.”
Other volatility-linked products include ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) and VelocityShares Daily 2x VIX Short-Term ETN (NYSEArca: TVIX).
iPath S&P 500 VIX Short Term Futures ETN
