10-Q: VS Trust Q1 2026: SVIX & UVIX Financials Revealed

VS Trust files its Q1 2026 Form 10-Q, detailing the financial performance and operational status of its -1x Short VIX Futures ETF (SVIX) and 2x Long VIX Futures ETF (UVIX).

Summary

• VS Trust has filed its quarterly report for the period ending March 31, 2026, covering the performance of its -1x Short VIX Futures ETF (SVIX) and 2x Long VIX Futures ETF (UVIX).
• The report provides detailed financial statements, including statements of assets and liabilities, operations, and cash flows for both ETFs.
• SVIX experienced a net decrease in net assets of $80,314,383 for the quarter, while UVIX saw a net increase of $217,522,625.
• The net asset value per share for SVIX decreased from $24.26 to $15.73, and for UVIX, it decreased from $5.70 to $8.67.
• The ETFs utilize VIX futures contracts and options to achieve their respective investment objectives, with significant notional values in these instruments.
• Management confirms that disclosure controls and procedures were effective as of March 31, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the significant losses reported by SVIX and the inherent risks associated with leveraged and inverse ETFs, despite UVIX's positive performance in the quarter.

Positives

• UVIX demonstrated significant growth in net assets, increasing by $217,522,625 during the quarter.
• UVIX achieved a total return of 52.15% at Net Asset Value and 51.66% at Market Value for the quarter.
• SVIX's net investment income was positive at $42,780 for the quarter, despite overall operational losses.
• The expense ratio for SVIX was 1.82% and for UVIX was 2.01% for the quarter, which are within expected ranges for leveraged ETFs.
• Management has certified that disclosure controls and procedures are effective.

Negatives

• SVIX experienced a substantial net decrease in net assets of $80,314,383 for the quarter.
• SVIX's net asset value per share significantly declined from $24.26 to $15.73.
• SVIX reported a net realized and unrealized loss on investments and futures contracts of $80,357,163 for the quarter.
• UVIX's net asset value per share decreased from $5.70 to $8.67, indicating a decline from the beginning of the period.
• The total return for SVIX was -35.15% at Net Asset Value and -35.16% at Market Value for the quarter.

Risks

• Correlation and Compounding Risk: The daily rebalancing of leveraged and inverse ETFs can lead to performance that differs significantly from the benchmark over periods longer than one day, especially in volatile markets.
• Leverage Risk: The use of leverage in UVIX (2x) and inverse leverage in SVIX (-1x) amplifies both gains and losses, increasing the risk of total loss.
• Counterparty Risk: Exposure to counterparties for derivatives like swap agreements and futures contracts carries the risk of default or bankruptcy, potentially leading to significant losses.
• Liquidity Risk: Market illiquidity can make it difficult to liquidate positions at desired prices, potentially causing losses, especially for the large positions held by these funds.
• Contango and Backwardation Risk: The process of rolling futures contracts can negatively impact performance, particularly in VIX futures where backwardation can lead to losses.
• Market Volatility: The VIX futures market is inherently volatile, and significant movements can lead to substantial gains or losses.
• Regulatory Risk: Changes in regulations governing derivatives and commodity pools could materially impact the funds' operations and financial performance.
• Position Limits: Current position limits and accountability levels set by exchanges could restrict the funds' ability to trade and impact their performance and correlation to benchmarks.

Future Outlook

The filing does not contain specific forward-looking statements or guidance beyond the operational descriptions and risk factors. The performance of the funds is directly tied to the daily movements of VIX futures, and their objectives are to achieve daily results corresponding to the inverse (-1x) for SVIX and twice (2x) for UVIX of their respective benchmarks.

Management Comments

• Management has evaluated the effectiveness of the Trusts and the Funds disclosure controls and procedures and concluded they were effective as of March 31, 2026.
• There were no changes in the Trusts or the Funds internal control over financial reporting during the quarter that materially affected them.
• Management has reviewed tax positions and concluded there is no tax liability resulting from unrecognized tax benefits.

Industry Context

StockSavvy.ai notes that this filing reflects the ongoing volatility in the VIX futures market, a key indicator of expected market turbulence. The performance of SVIX and UVIX directly correlates with this volatility, highlighting the specialized nature of these leveraged and inverse ETFs for short-term trading strategies rather than long-term investment.

Comparison to Industry Standards

• The expense ratios for SVIX (1.82%) and UVIX (2.01%) are in line with industry standards for leveraged and inverse ETFs, which typically carry higher fees due to their complex strategies and daily rebalancing.
• The significant net asset changes for both SVIX (decrease) and UVIX (increase) in the quarter are characteristic of products designed to track volatile indices like VIX futures, where daily compounding effects can lead to substantial divergence from longer-term benchmark performance.
• The use of futures contracts, options, and swap agreements by SVIX and UVIX is standard practice for ETFs aiming to provide leveraged or inverse exposure to specific market indicators.

Legal Proceedings

• None reported.

Related Party Transactions

• Volatility Shares LLC (the Sponsor) serves as the sponsor and commodity pool operator for the Trust and its Funds.
• SVIX pays the Sponsor a management fee of 1.35% per annum of its average daily net assets.
• UVIX pays the Sponsor a management fee of 1.65% per annum of its average daily net assets.
• U.S. Bancorp Fund Services, LLC serves as the administrator, transfer agent, and custodian.
• Foreside Fund Services, LLC serves as the Marketing Agent.

Stakeholder Impact

• Shareholders of SVIX have experienced significant losses in the quarter, impacting their investment value.
• Shareholders of UVIX have seen substantial gains in the quarter, increasing their investment value.
• The complex nature of these ETFs requires active management and understanding from all investors to mitigate risks.
• Service providers like U.S. Bank and Foreside Fund Services continue to provide essential operational support.

Next Steps

• Continue to monitor daily VIX futures movements and their impact on SVIX and UVIX.
• Review future filings for ongoing performance trends and any changes in risk factor disclosures.
• Investors should actively manage and monitor their investments, as frequently as daily, due to the nature of these funds.

Key Dates

Recommendation

The filing presents mixed results, with UVIX showing strong gains while SVIX experienced significant losses. The inherent risks and daily rebalancing nature of these leveraged/inverse ETFs make them suitable for short-term, active traders rather than long-term investors. Therefore, a 'hold' recommendation is appropriate, emphasizing the need for active monitoring and understanding of the specific risks involved for each fund.

Keywords

VS Trust, SVIX, UVIX, VIX Futures ETF, Short VIX Futures, Long VIX Futures, Form 10-Q, Quarterly Report, Volatility, Leveraged ETF, Inverse ETF, Derivatives, Futures Contracts, Options, Swap Agreements, Commodity Pool Operator, CFTC, SEC