ETF of the Week - ETF Commentary

The ETF of the week is the 

Velocity Shares Daily Inverse VIX Short Term ETN (XIV). T

his 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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