Key insights
- The article discusses the difficulty in directly tracking the VIX index through ETFs like VIXY. VIXY's performance deviates significantly from the VIX due to its reliance on VIX futures contracts, which are subject to contango and decay. This makes VIXY an unsuitable long-term investment for directly replicating VIX movements, resulting in a slightly bearish signal for related volatility products.
How do I invest in the Volatility Index - Symbol = VIX? I did a search, and there are apparently ETFs like ProShares VIXY which "seeks investment results, before fees and expenses, that match the performance of the S&P 500® VIX Short-Term Futures Index."
However, the performance of VIXY should closely mimic the performance of the VIX index, but I'm not seeing this. As you can see, from the performance in that image, the price of VIXY back in January 2011 was over $600,000!
How do I get exposure to the VIX index, which only moves between a minimum of 9 to a maximum of 84 in value? This VIXY ETF went from $630,000 to about $30, which is a -0.999955 decrease, so it doesn't look like a true proxy for the VIX volatility index.