ETF at heart of market turmoil lures record cash

ProShares volatility-linked fund took in more than $500 million last week.
FEB 12, 2018

You just can't keep a good trade down. The ProShares Short VIX Short-Term Futures fund, which lost more than 80% of its value last Tuesday, took in the most cash on record last week. The product, which goes by the ticker SVXY, was the fifth-most popular exchange-traded fund in the U.S., absorbing more than $500 million, data compiled by Bloomberg show. That made it more attractive than small caps, utilities or even Treasuries. Perhaps investors are looking to buy the dip. Funds that bet on market calm are certainly in a gully after volatility spiked to its highest level since 2015. But while at least two exchange-traded products that use the strategy imploded, SVXY weathered the storm. "VIX ETPs tend to see flows that are opposite to performance as traders bet on a quick, jackpot-style rebound," said Eric Balchunas, an ETF analyst with Bloomberg Intelligence. "All in all, these products have made more money than they've lost for investors since launching. That — along with the jackpot potential — is why they have such loyal customers." Sure enough, SVXY rose 13% on Friday to $10.86 a share. But it still remains far off its highs from last month, when the price edged toward $140 a share. (More: Fidelity halts investor purchases of three volatility-focused ETFs)

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