If you thought that Inverse/Leveraged/Volatility exchange traded funds and products had lost their investor appeal of late, you would be very wrong.
Over the past 5 days:
- Inflows into Inverse Volatility ETFs totaled $1.3 billion, only partially offset by $254 million of redemptions from Levered Long Volatility ETFs.
- Inflows into generic volatility exchange traded products (mostly VXX, the one-day VIX tracker) totaled $271 million.
But certainly, you must think, the “Inverse Volatility” trade must be over, and traders must be leaving the SVXY (ProShares Short VIX Short-Term Futures) after the fund’s net asset value dropped by 99% on Monday? Nope…
- SVXY Assets Under Management on Monday: $97.3 million
- AUM at the close on Tuesday: $409 million
- AUM at the close on Wednesday: $766 million
- AUM at the start of 2018: $770 million
- Last 5 days of inflows: $1.3 billion
Then there are the Levered Long and Short exchange traded products, which deliver +100% the daily return on an index like the S&P 500 or the NASDAQ Composite:
- One week inflows of $626 million
- While 2x products (long and short) have seen one week outflows of $138 million, 3x products saw $766 million of inflows over the same period
Against this positive backdrop for Levered/Inverse/Volatility products, plain vanilla ETFs are seeing notable outflows:
- One week outflows from equity ETFs: negative $22.4 billion
- One week outflows from US equity ETFs: negative $23.1 billion
- One week outflows for SPY/IVV (both S&P 500 trackers, and the two largest ETFs in US markets): negative $15.4 billion
The upshot here: at the margin, ETFs flows are skewing to products that amplify risk rather than reduce it.