Brace for Choppy Markets Ahead With These Volatility ETFs

Market Overview - The S&P 500 experienced solid double-digit growth of approximately 17% in 2025 despite concerns over tariffs, geopolitical tensions, and the AI bubble [1] - The beginning of 2026 has been marked by elevated geopolitical risks, particularly from ongoing tensions in the Middle East and Asia, leading to high uncertainty in the markets [2] Geopolitical Developments - Recent U.S. military operations in Venezuela have complicated the global geopolitical landscape, contributing to a 4.5% increase in the CBOE Volatility Index, indicating a shift towards risk-off sentiment among investors [3] - Limited immediate market reaction to the U.S. military actions in Venezuela has been observed, but there are warnings that geopolitical risks may be underestimated, prompting renewed interest in safe-haven assets [4] Investment Strategies - Increasing exposure to volatility ETFs in the short term is recommended as a strategic move for investors, especially during periods of market chaos [5] - For long-term investors, it may be beneficial to look past short-term uncertainties, but volatility-focused funds are ideal for those with a short-term horizon, as volatility is expected to persist in 2026 [6] Volatility ETFs - The iPath Series B S&P 500 VIX Short-Term Futures ETN aims to track the performance of the S&P 500 VIX Short-Term Futures Index and charges an annual fee of 0.89% [8] - The ProShares VIX Short-Term Futures ETF seeks to track the S&P 500 VIX Short-Term Futures Index and charges an annual fee of 0.85%, making it suitable for investors looking to benefit from expected increases in S&P 500 volatility [9] - The ProShares VIX Mid-Term Futures ETF tracks the S&P 500 VIX Mid-Term Futures Index and also charges an annual fee of 0.85%, targeting investors interested in anticipated volatility changes over a five-month horizon [11]