Inverse volatility ETFs are linked in an upside-down relationship to a basket of volatility futures contracts based on the Chicago Board Options Exchange Market Volatility Index (VIX) or EURO STOXX 50 Index. VIX is a real-time index that represents the market's expectation of 30-day forward-looking volatility, as viewed through S&P 500 index options. It provides a measure of market risk and investor sentiment, and is popularly known as the "fear index".

Inverse volatility ETFs give sophisticated investors the ability to build high-risk equity positions based on how volatility futures contracts will trade. The price of these funds will rise when volatility drops and fall when volatility rises. Short sales can also be taken, in which volatility and price will rise and fall in tandem.

Here are the top performing inverse volatility ETFs for 2020, as of March 10, 2020.

ProShares Short VIX Short-Term Futures (SVXY)

  • Performance over 1-Year: -11.8%
  • Expense Ratio: 1.4%
  • Annual Dividend Yield: NA
  • 3-Month Average Daily Volume: 2.9 M
  • Assets Under Management: $368.1 M
  • Inception Date: October 3, 2011
  • Issuing Company: ProShares

This ETF tracks an index comprised of short-term VIX futures contracts in an inverse relationship. Returns will follow the slope of the futures curve, which fluctuates according market expectations for higher or lower prices over contracts with different expiration dates. This instrument has a daily reset feature that will compound positive and negative returns when held for more than one session.

VelocityShares Daily Inverse VIX Medium Term ETN (ZIV)

  • Performance over 1-Year: -23.9%
  • Expense Ratio: 1.4%
  • Annual Dividend Yield: 0.00%
  • 3-Month Average Daily Volume: 40,874
  • Assets Under Management: $50.2 M
  • Inception Date: November 29, 2010
  • Issuing Company: Credit Suisse

This Exchange-Traded Note (ETN) tracks an index comprised of mid-term VIX futures contracts in an inverse relationship. Returns will follow the slope of the futures curve, which fluctuates according market expectations for higher or lower prices over contracts with different expiration dates. This instrument has a daily reset feature that will compound positive and negative returns when held for more than one session.

VelocityShares 1X Daily Inverse VSTOXX Futures ETN (EXIV)

  • Performance over 1-Year: -40.7%
  • Expense Ratio: 1.4%
  • Annual Dividend Yield: NA
  • 3-Month Average Daily Volume: 46,379
  • Assets Under Management: $34.0 M
  • Inception Date: May 2, 2017
  • Issuing Company: UBS

This ETN tracks an index comprised of EURO STOXX 50 futures contracts in an inverse relationship. Returns will follow the slope of the futures curve, which fluctuates according market expectations for higher or lower prices over contracts with different expiration dates. This instrument has a daily reset feature that will compound positive and negative returns when held for more than one session.