Since the VIX is not an actual index, it can't be bought. Investors can achieve greater returns with greater risk via options or futures, however, because they can hold them until expiration.

The takeaway is that these ETNs may not be the best bet for individual investors. Those who understand how the VIX works and want to make a bet on market volatility can achieve better returns in the futures and options markets. Furthermore, any number of leveraged inverse ETFs are likely to outperform the VIX ETNs, since spikes in VIX are typically accompanied by selloffs in stocks.

There may be some investors who can make use of the VIX futures ETNs as part of complex portfolio strategies, but investors who are looking to make a one-way bet on a market selloff should try other products.

I previously named the VXX and VXZ pair as one of the 10 most dangerous ETFs.


Comparing Emerging Eastern Europe ETFs

Posted 10/5/2009 12:20 p.m. EDT

On Friday, iShares launched the newest member of its international ETF fund family. The iShares MSCI Emerging Markets Eastern Europe Index Fund ( ESR) is designed to track the MSCI Emerging Markets Eastern Europe Index. Companies represented on this index hail from four nations: Russia, Poland, Hungary and the Czech Republic.

Investors looking for access to emerging Eastern Europe through this fund should be aware that the ESR is heavily weighed in energy companies. Gazprom and Lukoil are the fund's top two holdings and make up over 35.5% of the fund's total assets. Other top holdings include Sberbank, Cez and Norilsk Nickel.

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