ETF of the Week - ETF Commentary
11 Octubre 2011 - 9:58AM
Zacks
The ETF of the week is the
Velocity Shares Daily Inverse
VIX Short Term ETN (XIV). This brand new ETF created by
VelocityShares approximately one year ago, aloows an investor to
bet against market volatility. Volatility which is measured by the
VIX index, rises when fear enters the market or when there is a lot
of uncertainty on the economic front. The VIX Index decline when
investors become more complacent and the market is an uptrend.
Thus as the fears of an imminent recession have slowed and Greece
looks like it will be bailed out Volatility has declined sharply,
the best for an investor to play this trend is through the use XIV,
the Inverse VIX ETF.
The Velocity Shares Daily Inverse VIX Short Term ETN
(XIV) holds short term one month VIX futures Contracts,
and rolls them over every month. Thus the ETF tracks the actual VIX
index very closely. This ETF has a 1.35% expense ratio, which
is relatively high but at this time there are little or no other
alternatives to bet against volatility so it should not be a big
deal, since most investors should not hold this ETF for more than a
month at a time.
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