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VXZ

The Chicago Board Options Exchange Volatility Index, better known as the VIX, has been one of the most carefully-watched benchmarks since its inception in the early 1990s. In 2004, VIX futures gave investors a way to actually invest in the benchmark, as did VIX options in 2006 (both won the Most Innovative Product award at the Super Bowl of Indexing Conference). Earlier this year, investing in volatility became a whole lot easier for the “average” investor with the introduction of a pair of exchange-traded products from iPath: the S&P 500 VIX Short-Term Futures ETN (VXX) and the S&P 500 VIX Mid-Term Futures ETN (VXZ). [click to continue…]

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Defending The “Most Dangerous ETFs”

by on September 25, 2009

Don Dion, who covers ETFs for TheStreet.com and runs Dion Money Management, recently wrote a three part series highlighting the “10 Most Dangerous ETFs”. Dion notes that as the ETF industry continues to expand beyond “plain vanilla” funds, investors are introduced to products that can face significant liquidity issues, be subject to increased regulatory scrutiny, and carry “unprecedented risks” associated with their complex and non-traditional strategies. While I agree with most of Dion’s analysis (and certainly share his view that there are a number of complex ETFs that should be limited to the most sophisticated investors), I feel it’s necessary to defend a few of the ETFs that made the list:  [click to continue…]

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Tough Times For ETNs

by on June 8, 2009

A recent article from the Wall Street Journal’s John Spence highlights the struggles facing exchange-traded notes, or ETNs, the smaller and less-known and cousins to the tremendously popular ETFs. Although similar to ETFs in many respects, ETNs have some key differences- mainly that they are debt instruments issued by banks, rather than a share in a portfolio [...]

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Basics of ETN Investing

by on May 19, 2009

Perhaps you’ve noticed that many of the investment vehicles in the ETF industry are technically referred to as exchange-traded notes, or ETNs. While ETNs are similar to ETFs in many ways, there are also some key differences that should be considered before investing.

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