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The iPath S&P 500 VIX Mid-Term Futures ETN is an exchange-traded note that gives investors exposure to the S&P 500 VIX Mid-Term Futures Total Return Index. When there are periods of elevated price volatility in medium-term S&P 500 futures, the value of VXZ shares tend to rise, while they decline in value when medium-term market volatility is moving lower.
VXZ fund maintains a long position in intermediate VIX futures contracts, giving holders exposure to medium-term expectations for the volatility index. The fund rolls over VIX futures contracts with expirations of four, five, six and seven months.
Exchange-traded notes are debt instruments with shares that trade on the stock market like ETFs. VXZ is designed to help sophisticated investors take tactical, short-term positions on expected market volatility in the medium term. It offers no yield and the long-term value of the fund goes to zero, making it totally inappropriate to buy and hold.