The volatility ETF’s are currently the talk of the town (VXX, UVXY, TVIX, VIXY).  Most investors I have spoken to have no idea how they work, the most frequently asked questions is; why is the VIX up 10% and the VXX is only up 2%?

Over time, this cost adds up, and is the primary reason VXX is down an eye-popping 99.6 percent since its launch, and down significantly in every year since inception. Fluctuations in the underlying VIX Index matter, too, but over longer-term horizons, contango are what’s been killing returns for the ETN.–ETF.COM

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