July 10, 2020
I'm against this rule change for a couple of reasons.
a) 2x long volatility is a widow maker during bull markets. TVIX is the obvious predecessor of this ETF, whose annual returns look like the following:
2019 -92.95%
2018 25.19%
2017 -94.02%
2016 -93.87%
2015 -77.68%
2014 -62.14%
2013 -91.69%
2012 -97.29%
2011 -49.67%
I'm sure the prospectus would claim that this instrument shouldn't be held long-term but given these numbers above, it's almost impossible to make money long side, even for short-term. So what's the point of this new ETF besides the issuer wanting to invite speculative gamblers so they can make money off of management expenses?
b) 2x long volatility doesn't make sense as a product. Volatility is already very volatile as-is, and we saw UVXY decrease its leverage from 2x to 1.5x in 2018. What makes more sense is to bring a -1x product to market, such as SVIX.