January 4th ProShares plans to offer two new volatility products:
- VIXY ProShares VIX Short-Term Futures ETF— a VXX clone
- VIXM ProShares VIX Mid-Term Futures ETF—a VXZ clone
This Morningstar article provides more information. Right now I don’t see much that these new funds have to recommend themselves over the 13 funds that preceded them. Their liquidity and spreads will be poor at first, and an 0.04% lower annual fee (0.85% vs 0.89% for Barclays’ volatility products) is an almost laughable differentiator from Barclays’ well established VXX and VXZ products.
It’s not highlighted in the press release, but I believe these are the first Exchange Traded Funds (ETFs) in the volatility space. All other products are Exchange Traded Notes (ETNs). If I was a member of ProShares marketing department I would make a big deal about this. ETNs are dependent on the credit worthiness of the provider—ETFs pass this risk onto the underlying securities (e.g., S&P 500 stocks for SPY). This probably isn’t a significant factor, but ProShares needs some angle in order to compete successfully.
A combined VIXY and VIXM prospectus, can be found here.
For a list of all the current volatility ETNs and ETFs see this post.
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