VIX is the ticker symbol that represents the Chicago Board Options Exchange Market Volatility Index. The VIX was introduced to measure the severity of the ups and downs of the stock market.

While exchange-traded funds (ETFs) typically try to mimic an index of stocks, they can actually attempt to replicate the behavior of any index, including the VIX. (See also: The Four Most Common Indicators in Trend Trading.)

An inverse VIX ETF is one that is used to profit from the opposite of the movements of the VIX. Stock market performance tends to suffer when volatility is high. In fact, the VIX is often called the “fear index.” Investors use inverse volatility ETFs to protect their portfolios.

The inverse VIX ETFs that are listed below were chosen based on whether they have had positive returns for the year. Returns vary widely on these funds.

Also, be aware that the two low-volume funds can be difficult to get out of in a hurry, because there may not be buyers available for any shares you offer. All figures are current as of September 12, 2017.

1. VelocityShares Daily Inverse VIX Short-Term ETN (XIV)

XIV uses futures contracts based on the VIX. It seeks the inverse of the S&P 500 VIX Short-Term Futures index.

This ETF also uses exchange-traded notes (ETNs), which are similar to bonds in that they are unsecured debt. The fund may invest in more than one futures contract at once.

  • Avg. Volume: 13,319,863
  • Net Assets: $1.27 billion
  • Yield: 0.00%
  • YTD Return: 78.99%

2. ProShares Short VIX Short-Term Futures ETF (SVXY)

This fund is similar to XIV in that it uses the S&P 500 VIX Short-Term Futures Index as its benchmark. It measures a rolling long position and seeks a -1x return of the underlying index. In other words, it is not a leveraged ETF.

  • Avg. Volume: 6,966,058
  • Net Assets: $1.43 billion
  • PE Ratio (TTM): N/A
  • Yield: 0.00%
  • YTD Return: 76.30%

3. VelocityShares Daily Inverse VIX Medium-Term ETN (ZIV)

The S&P 500 VIX Mid-Term Futures index provides the benchmark for ZIV. This fund also uses exchange-traded notes to achieve an inverse return on this index.

  • Avg. Volume: 146,496
  • Net Assets: $169.79 million
  • PE Ratio (TTM): N/A
  • Yield: 0.00%
  • YTD Return: 54.98%

4. iPath Inverse S&P 500 VIX Short-Term Futures ETN (II) ETF (IVOP)

IVOP focuses on short-term futures through the S&P 500 VIX Short-Term Futures Index.

Investors in this fund have their money tied to the S&P 500, and are watching volatility that is implied by the forward volatility curve. (See also: What is the Relationship Between Implied Volatility and the Volatility Skew?)

  • Avg. Volume: 257
  • Net Assets: $358,450
  • PE Ratio (TTM): N/A
  • Yield: 0.00%
  • YTD Return: 1.11%

5. iPath Inverse S&P 500 VIX Short-Term Futures ETN (XXV)

This is another short-term futures ETF that seeks the inverse of the performance of the S&P 500 VIX Short-Term Futures index. It uses exchange-traded notes.

  • Avg. Volume: 41
  • Net Assets: $435,410
  • PE Ratio (TTM): N/A
  • Yield: 0.00%
  • YTD Return: 1.04%

Bottom Line

It is important to note that the similar focus of many of these ETFs is not reflected in their performance. The money manager of an inverse VIX ETF is paramount. This is a tricky approach to investing, so review the personnel who make decisions for the fund, and look at their track records.

Investors in inverse volatility ETFs should be aware that sudden large spikes in volatility can cause heavy losses. Understanding how volatility affects stocks requires much study, and investing in an ETF that seeks the inverse of volatility performance is for those who know what changes in volatility mean for the inverse fund’s holdings. (See also: Volatility's Impact On Market Returns.)

Because volatility fluctuates regularly, all of these ETFs are probably best used as short-term plays rather than as long-term investments. (See also: How to Day Trade Volatility ETFs.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.