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Volatility Funds Attracting Inflows Despite Terrible Performance

Monday, November 21, 2016 11:03
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Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows update, which includes continued interest in volatility funds, despite horrendous performance.

Another day, another week, and another alltime trading low for “Long Volatility” ETPs across the market landscape, like VXX (iPath S&P 500 VIX Short-Term Futures ETN), VIXY (ProShares VIX Short-Term Futures ETF), UVXY (ProShares Ultra VIX Short-Term Futures), and TVIX (VelocityShares Daily 2X VIX Short Term ETN). The VIX itself is below $13 today, as what little volatility remained in the markets following Trump’s victory seems to be draining out completely.

Somehow, VXX still has managed to pull in net assets, however. In the trailing one month period, the largest fund tied to VIX futures has seen inflows of $85 million, in spite of truly awful performance (the fund has fallen nearly 65% year-to-date).


Elsewhere, and echoing recent sentiment, S&P 500 trackers SPY and IVV continue to attract new assets recently via creation, along with other major index ETFs in the space like IWM (Russell 2000).

On the other hand, we have seen redemption pressure as we have noted in Emerging Markets, notably in equities like EEM (iShares MSCI EM) as well as on the bond side via EMB (iShares JPM USD Emerging Markets Bond), with sellers surfacing in both of these widely-held products.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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