Volatility-linked exchange traded products such as iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) and ProShares Ultra VIX Short-Term Futures (NYSEArca: UVXY) fell sharply Thursday after Fed chief Ben Bernanke reassured markets the central bank will keep rates low for the foreseeable future.
VXX was down nearly 3% while UVXY, a leveraged ETF, slipped over 5%. The products are designed to track futures contracts based on the CBOE Volatility Index, or VIX.
The exchange traded products were trading at fresh split-adjusted lows. VIX ETFs have undergone reverse share splits in recent years as their share price fall.
For example, VXX is down about 70% for the trailing 12 months, according to Morningstar.
In stocks, the Dow rallied about 150 points at Thursday’s open to rise above its all-time record closing price.
“The Fed is emphasizing that policy is going to remain accommodative in the near term,” said Tim Gibbens, an investment manager at Alliance Trust, in a Bloomberg report. “It’s a highly flexible and data-dependent stance which can mean that bond purchases won’t necessarily stop this year. They’re trying to manage market expectations after being surprised at the reaction after May.”