The short-volatility trade roars back to life

Author: Adam Button | Category: News

SVXY was the fifth-most popular ETF last week

Money rushed back into short-volatility ETFs late last week as investors piled into a trade that can work for years before it blows up.

The SVXY climbs when the VIX moves lower, something that's virtually inevitable with the VIX at 30.

To see why it's been such a popular trade, you only need to look at the chart. The SVXY climbed to $140 from $20 since mid-2016 before it imploded and fell to a low of $9.57 last week.

At the same time, this particular fund benefitted last week from the implosion of its competitor -- XIV. It will wind down later this month after falling 96%.

Last week, the SVXY recorded a $500 million inflow and was the fifth-most popular exchange-traded product, according to Bloomberg.

So the next time one of these products implodes, there will be no one who can say they weren't warned.

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