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This ETF offers investors a way to access equity market volatility, an asset class that may have appeal thanks primarily to its negative correlation to U.S. and international stocks. The VIX index tends to spike when anxiety increases, and as such often moves in the opposite direction of stocks. However, it's important to note that VXX does not represent a spot investment in the VIX, but rather is linked to an index comprised of VIX futures. As such, the performance of this product will often vary significantly from a hypothetical investment in the VIX (which isn't possible to establish). The focus on short-dated futures increases the correlation to the VIX, but also increases the potential for the adverse impacts of contango. Longer-dated options such as VIIZ, VIXM, or VXZ may be appropriate for longer holding periods. This ETP should never be held over the long term in a buy-and-hold portfolio; it is designed as a trading instrument that appeals to those looking to place a short term bet against the market or use as a hedging tool. One structural note: as an ETN, VXX avoids tracking error but may expose investors to credit risk, as well as unique tax treatments. VIXY offers similar exposure in an ETF wrapper, while VIIX is a near-identical ETN alternative.
The adjacent table gives investors an individual Realtime Rating for VXX on several different metrics, including liquidity, expenses, performance, volatility, dividend, concentration of holdings in addition to an overall rating. The "A+ Metric Rated ETF" field, available to ETFdb Pro members, shows the ETF in the Volatility with the highest Metric Realtime Rating for each individual field. To view all of this data, sign up for a free 14-day trial for ETFdb Pro. To view information on how the ETFdb Realtime Ratings work, click here.View the Category Report
The following tables and charts contain in-depth metrics for this ETF and compare it to similar peer ETFs within its ETFdb.com Category.
This ETF is not currently available for commission free trading on any platforms.
There are 8 other ETFs in the Volatility ETFdb.com Category that are also eligible for commission free trading:
This section shows how this ETF has performed relative to its peer group ETFdb.com Category.
This section compares the fund flows of this ETF to peers in the same ETFdb.com Category.
The following charts can be customized to display historical performance in a number of different formats, including line charts, bar charts, and candlesticks. Time periods can be adjusted to increase or decrease the period shown, ranging from five minutes to several months.
The following chart also includes the option to compare the performance of VXX relative to other ETFs and benchmarks or to include indicators such as Bollinger Bands, relative strength, and moving averages.
This section shows how the volatility of this ETF compares to the peer group ETFdb.com Category.
Published March 1, 2016
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The iPath S&P 500 VIX Short-Term Futures ETN (VXX ) tracks the S&P 500 VIX Short-Term Futures Index, which measures market volatility among the 500 constituents of the S&P 500. Typically, the VIX is also known as the “fear index,” allowing investors to take positions on market sentiment. Hedge funds have used the VIX to hedge risks in their portfolios, while many long-term investors use it as downside protection. This year, VXX is mildly in the green, almost flat, with a gain of 1.2%, marginally outperforming the S&P 500.
The macro picture for VXX is looking good. There are several macroeconomic headwinds—an anemic U.S. recovery, slowing demand in China, a near-negative interest rate environment in Japan and the EU, a stronger dollar, and capitulation of debt of the companies in the energy and commodities sectors—that present downside risks to earnings reports from companies included in the S&P 500. As early as January 2016, VXX traded near $30, a sign of troubled times on the back of weak data from China, adding to the woes.
In terms of performance, the ETN has not done well as equities have rallied over the last five years. In percentage terms, VXX is down 59.2%. Over the last one year, it is down 21.7%, despite spikes in late August and earlier this past January on some of the same macroeconomic concerns. In both August and January the VIX spiked, almost doubling in value from $16.50 to $30. As of late, equities have rallied on the back of a strong global consumer, with earnings recovering in some sectors such as staples, technology, and services. The energy/commodities complex, too, has probably seen the worst already, with VXX falling from $29.50 in January 2016 to its current level of $19.90.
That takes us to VXX’s financial ratios. VXX has just over $1.1 billion in assets under management. The ETN does not have a dividend yield as it is an uncollateralized debt instrument. Currently, VXX is near its all-time lows, trading as of this writing at $19.90, with an all-time low of $15.90 reached in late August after the markets rallied back from the August 2015 swoon. Its 52-week high is $31.41, which it reached twice in August 2015 and January 2016. VXX tends to have a very high inverse correlation with the direction of the S&P 500.
Among the downside risks to the global economy are slowing demand in emerging markets, unknown risks from Chinese debt, a rising dollar that has hurt the earnings of even well-established U.S. companies like Apple (AAPL) and a Fed whose monetary policy is hawkish in the face of unknown headwinds to the U.S. economy.
Finally, the Dow and S&P 500 are within 7% of their all-time highs, while VXX is near an all-time low. Since VXX has an inverse relationship with the stock market, it is prudent to start accumulating this ETN to hedge downside risks to other parts of your portfolio. Therefore, VXX is a Buy with a price target of $25.
Source: LSEG Information Services (US), Inc. (“LSEG”) © LSEG 2016. All rights in the XTF data, ratings and / or underlying data contained in this communication (“the XTF information”) vest in LSEG and/or its licensors. Neither LSEG nor its licensors accept any liability arising out of the use of, reliance on or any errors or omissions in the XTF information. No further distribution of the XTF information is permitted without LSEG’s express written consent. LSEG does not promote, sponsor or endorse the content of this communication.