VIX futures-based ETPs represent a significant industry innovation, because they give investors the ability to trade implied volatility in a more accessible format.
It is important to remember that volatility is not a true asset class in the sense that it is not a return-generating asset. Still, it can serve as a diversifier in a portfolio and can be used to hedge tail risk or generate excess return by taking a short-term view on volatility. However, these are complex products and recommended only for sophisticated investors who are familiar with volatility and futures-based products.
In this chapter we explore some of the key concepts related to these products.