The?iPath S&P 500 VIX Short-Term Futures ETN (VXX) launched in 2009, but after five years and many billions in transactions, it?s still a widely misunderstood product in some quarters. All of the volatility ETPs are, to some extent.
A recent post at the?Inside Investing blog for CFA Institute?walked through some of the most familiar complaints about VXX, and I was going to link to a comprehensive rebuttal in the comments, but I couldn?t find one. I?ve written some defenses of volatility ETPs in the past, and friends around the blogosphere have as well, but I didn?t find anything that got right to the heart of what makes these products work in a way that would clear up misunderstanding. So I tried to write a more decisive defense of these products, and I?ll let you judge how close the article comes to shutting the door on the most frequently raised complaints.
?Doing What It Says on the Tin: The Value of Volatility ETPs,? Inside Investing, February 2014