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.

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. (See also: The Four Most Common Indicators in Trend Trading.)

Also, it is important to be aware that the lower-volume funds on this list can be difficult to get out of in a hurry, because there may not be buyers available for the shares you offer. All figures are current as of January 26, 2018.

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.

  • Average Volume: 6,138,338
  • Net Assets: $1.21 billion
  • 2017 YTD Return: 187.57%
  • 2018 YTD Return: 1.70%

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. (For more, see: Tracking Volatility: How the VIX Is Calculated.)

  • Average Volume: 5,372,764
  • Net Assets: $802.12 million
  • 2017 YTD Return: 181.84%
  • 2018 YTD Return: 0.51%

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.

  • Average Volume: 111,230
  • Net Assets: $213.64 million
  • 2017 YTD Return: 90.48%
  • 2018 YTD Return: 1.14%

4. VelocityShares VIX Short Volatility Hedge ETN (XIVH)

The S&P 500 VIX Futures Short Volatility Hedged Index provides the benchmark for XIVH, an ETN that will appeal to investors wanting to be short volatility, but with a hedging component that limits drawdowns in the middle of corrections or bear markets. (See also: What is the Relationship Between Implied Volatility and the Volatility Skew?)

  • Average Volume: 2,350
  • Net Assets: $75.52 million
  • 2017 YTD Return: 119.13%
  • 2018 YTD Return: 0.13%

The 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 it is a good idea to 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.)

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