Investors have poured more than $83 billion into U.S.-listed
so far this year, and while U.S. equities ETFs have attracted the
most investor dollars on a nominal basis, it's alternatives ETFs
that have actually seen their assets grow the most in percentage
And that growth is nearly all tied to the iPath S&P 500 VIX
Short Term Futures ETN (NYSEArca:VXX), which has pulled in $855.3
million so far this year.
In all, total assets linked to alternative ETFs have grown 32.3
percent year-to-date after net inflows of $1.13 billion pushed
total assets in the asset class above $3.5 billion.
It's relatively small potatoes compared to the $48 billion net
inflows into U.S. equities in the same time period, but on
percentage terms, equities-linked inflows amount to only a 6.3
percent increase in total U.S. equities ETF assets
There are about 50 funds that comprise what IndexUniverse
classifies as alternatives ETFs-funds like the Cambria Global
Tactical ETF (NYSEArca:GTAA), the IQ Hedge Macro Tracker ETF
(NYSEArca:MCRO), the PowerShares DB G10 Currency Harvest ETF
(NYSEArca:DBV) and the entire suite of VIX-linked strategies.
But it's flows into one strategy, VXX, that's driving the 32
percent asset growth in the segment. The fund, the largest
alternatives ETF, with $1.4 billion in total assets, has now
gathered some $855.3 since Jan. 1, according to data compiled by
IndexUniverse ETF analyst Paul Britt noted that many investors
turn to VXX in an effort to hedge their equity positions,
particularly if they are bracing for a downward correction in the
There's no question that this year's rally to record-high levels
in both the S&P 500 and the Dow Jones industrial average, amid
what many see as tepid U.S. growth at best, has many wondering
whether a correction is in the cards.
This week alone, investors got a small taste of that
possibility, as the S&P 500 slipped more than 1 percent in two
days to close Thursday at 1,650.51, while Japan's Nikkei plunged
7.3 percent, its worst one-day sell-off since the earthquake and
tsunami in March 2011.
Based on the CBOE Volatility Index (VIX), VXX is often looked at
as a hedging tool, because VIX and the S&P 500 Index tend to
move in opposite directions, Britt recently pointed out in a
The fund has now bled more than 40 percent of its value
year-to-date after finding itself ranking among the top
worst-performers in 2012.
That's to say that VXX attracts almost as much money as it loses
amid active daily trading volume amounting to as much $1 billion,
'VXX is like a big bucket of money with a hole in the bottom,'
he noted. 'But investors do use it as a hedge when there's a lot of
uncertainty in the market.'
'This isn't unusual at all,' added Britt. 'VXX is a short-term
vehicle used for short-term exposure.'
|Asset Class ETF Year-To-Date
Net Flows ($, mm)
AUM ($, mm)
% of AUM
|U.S. Fixed Income
|International Fixed Income
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