CAOS vs VIXY

CAOSBAlpha Architect Tail Risk ETF

VIXYDProShares VIX Short-Term Futures ETF

In short

CAOS Most S&P 500 options funds sell calls to collect premium. CAOS runs the other way: it buys protective puts and put spreads on the index and parks collateral in box spreads. The hedge-first take in a room full of premium sellers, active since 2013.

VIXY The original volatility ETF: ProShares launched it in 2011 to put VIX futures in a fund wrapper instead of a bank note. It tracks an index that rolls short-dated VIX futures daily, designed to move with expected S&P 500 volatility.

Stated mandate

CAOS The Fund seeks maximum total return through capital appreciation and current income. Its strategy combines S&P 500-linked options, protective puts and put spreads, with collateral investments that may include box spreads.

VIXY The fund seeks, before fees and expenses, to match the performance of the S&P 500 VIX Short-Term Futures Index. It is designed to benefit from increases in expected S&P 500 volatility as reflected in VIX futures prices.

Why people hold it

• CAOS The contrarian in its cohort: it buys downside protection (protective puts and put spreads) on the S&P 500 rather than selling calls for income.alphaarchitect.com
• Collateral can sit in box spreads, an options structure used to earn a cash-like return, so the money backing the hedge isn't dead weight.alphaarchitect.com
• Running since 2013 as an actively managed 1940 Act ETF, and it sits in the upper half of its S&P 500 options peer group.

• VIXY Launched January 2011 as one of the first volatility ETFs, built to deliver VIX futures exposure in a fund rather than an unsecured bank-issued note.sec.gov
• Plain 1x exposure to the short-term VIX futures index: no leverage multiplier stacked on top of an already jumpy asset.proshares.com
• Actively traded, which matters for a tool most people use in short bursts around market stress rather than hold for years.
• ProShares says on the fund page that rolling VIX futures daily has historically carried significant costs that reduce returns. Unusual candor about a built-in drag.proshares.com

Worth knowing

• CAOS The 0.63% fee runs a touch above the middle of this peer group; IVVW and PBP charge less for their own S&P 500 options strategies.
• Protection has a price. Buying puts is an ongoing cost in calm, grinding-higher markets, which is the flip side of owning a hedge.alphaarchitect.com
• Actively managed, so results follow the manager's option choices rather than a published index formula you can look up in advance.alphaarchitect.com

• VIXY The daily roll is the whole story: ProShares notes VIX futures indexes have historically shown significant roll costs, and that VIX levels have tended to revert to an average.proshares.com
• Files as a commodity pool, not a 1940 Act fund, and sends a K-1 at tax time. Worth knowing before it lands in a taxable account.proshares.com
• At 0.85% a year, it costs more than the typical hedging peer, including TAIL (0.59%) and CAOS (0.63%).

Full CAOS profile⁠

Full VIXY profile⁠