With President Donald Trump opening new trade war fronts, analysts are predicting a highly volatile summer, leaving investors looking to weather stormy months with exchange traded products that track the CBOE Volatility Index or VIX.
The ProShares VIX Short-Term Futures ETF (VIXY) is one such product. The fund is garnering the attention of companies the likes of Morgan Stanley, Tuttle Tactical Management, Lakeview Capital Partners LLC, Rational Advisors LLC, and Ironsides Asset Advisors LLC, all of which recently raised their stakes or purchased new positions in VIXY.
VIXY seeks investment results, before fees and expenses, that match the performance of the S&P 500 VIX Short-Term Futures Index, according to the fund’s fact sheet. Intended for short-term use, the fund was created for investors that seek to profit from increases in the expected volatility of the S&P 500 and reduce U.S. equity portfolio risk. VIXY has an expense ratio of 0.85%.
“Since VIXY holds nearby VIX futures contracts and given the inverse relationship between stock prices and the volatility index, a bumpy ride, and correction in the stock market could lift the level of the VIX and the price of the VIXY product over the summer months,” according to seekingalpha.com.
In April the fund was the target of a large increase in short interest. “As of April 30th, there was short interest totaling 1,206,611 shares, an increase of 36.9% from the April 15th total of 881,182 shares,” according to techknowbits.com.
“If sell in May and go away reflects the coming market action in stocks, VIXY could be a useful tool for traders looking to capitalize on turbulence in the stock market over the coming weeks and months,” according to Seekingalpha.com
For more information on the CBOE Volatility Index, visit our VIX category.