10-K: VS Trust Reports Significant VIX ETF Losses in 2025

VS Trust's VIX futures ETFs, SVIX and UVIX, experienced substantial declines in Net Asset Value per share for the fiscal year ended December 31, 2025, alongside increased operational expenses.

Summary

• VS Trust operates two VIX futures ETFs: -1x Short VIX Futures ETF (SVIX) and 2x Long VIX Futures ETF (UVIX), both listed on the Cboe BZX Exchange.
• SVIX's Net Asset Value (NAV) per share decreased by 4.45% in 2025, following a 32.80% decrease in 2024.
• UVIX's NAV per share plummeted by 83.2% in 2025, after a 75.3% decrease in 2024.
• SVIX reported a net income of $28,198,893 in 2025, a significant increase from $6,342,960 in 2024.
• UVIX incurred a substantial net loss of $(651,734,827) in 2025, worsening from a net loss of $(31,752,149) in 2024.
• Total combined net assets for VS Trust increased to $543,322,400 in 2025 from $487,835,082 in 2024, primarily due to capital share transactions despite operational losses.
• The Trust adopted a 'Policy Relating to Recovery of Erroneously Awarded Compensation' to comply with Exchange rules, applicable if incentive-based compensation is awarded in the future.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a highly negative report due to the severe per-share NAV declines for both funds, particularly UVIX, indicating significant losses for investors despite an increase in overall net assets driven by new share creations.

Positives

• SVIX reported a net investment income of $522,434 in 2025, an increase from $937,219 in 2024.
• The combined net assets of VS Trust increased by $55,487,318 from 2024 to 2025, reaching $543,322,400, driven by capital share transactions.
• UVIX saw a significant increase in shares outstanding, from 5,531,498 in 2024 to 58,157,473 in 2025, indicating strong investor interest in creating new units despite performance.

Negatives

• SVIX's NAV per share decreased by 4.45% in 2025 and 32.80% in 2024, indicating a consistent decline in per-share value.
• UVIX's NAV per share experienced a drastic decline of 83.2% in 2025 and 75.3% in 2024, reflecting severe underperformance.
• UVIX recorded a substantial net loss of $(651,734,827) in 2025, significantly larger than the $(31,752,149) loss in 2024.
• The combined Trust experienced a net investment loss of $(54,634) in 2025, compared to a net investment income of $364,263 in 2024.
• Total expenses for SVIX increased to $5,100,910 in 2025 from $3,935,847 in 2024, and for UVIX to $7,873,283 in 2025 from $2,619,304 in 2024.

Risks

• Correlation and Compounding Risk: Funds do not seek to achieve objectives over periods greater than a single day; longer holding periods, higher benchmark volatility, inverse exposure, and greater leverage can dramatically and adversely affect longer-term performance.
• Market Risk: Exposure to VIX futures contracts means capital is at risk due to changes in contract values, with potential for unlimited risk in short positions.
• Credit Risk: Exposure to counterparty default for swap agreements, futures contracts, and forward contracts, despite mitigation efforts like collateral requirements.
• Liquidity Risk: Financial Instruments may not always be liquidated at desired prices due to market conditions, regulatory considerations, or disruptions, potentially leading to losses.
• Leverage Risk: The use of leverage (e.g., 2x multiplier for UVIX) increases the risk of total loss, even over short periods, especially with adverse market movements.
• Contango and Backwardation Risk: Rolling futures contracts can negatively impact performance, particularly when VIX futures prices reflect higher expected volatility further out in time (contango).
• Natural Disaster/Epidemic Risk: Events like pandemics (e.g., COVID-19) can disrupt economies and markets, leading to increased volatility, market losses, and difficulty in achieving investment objectives.
• Risk that Current Assumptions and Expectations Could Become Outdated: Global economic shocks can quickly render underlying assumptions inaccurate, leading to significant losses.
• Regulatory Risk: Changes in CFTC rules and regulations for derivatives markets could materially and adversely impact the Funds, increasing compliance costs and affecting operations.

Future Outlook

The Funds' forward-looking statements are not guarantees of future results and are subject to inherent uncertainties, risks, and changes in circumstances within the financial instrument markets, related physical commodities, legal and regulatory regimes, and the broader economy. These factors may cause actual results to differ materially from any expressed forward-looking statements. The Sponsor does not expect to make distributions to shareholders.

Management Comments

• The Sponsor has exclusive management and control of all aspects of the Trust's business.
• The Sponsor may, in its sole and absolute discretion, appoint affiliates as additional sponsors and retain persons it deems necessary to effectuate the Trust's purposes.
• The Sponsor will seek to minimize the market impact of rebalances across all VIX ETPs it sponsors by limiting participation to no more than 10% of contracts traded on CFE during any Rebalance Period.
• The Sponsor believes that a Fund will enter an extended rebalance period most often during periods of extraordinary market conditions or illiquidity in VIX futures contracts.

Industry Context

StockSavvy.ai notes that the VIX futures ETF market is highly specialized, catering to investors seeking exposure to implied market volatility of the S&P 500. The significant NAV declines for both short (SVIX) and long (UVIX) VIX futures ETFs in 2025 and 2024 highlight the inherent challenges and risks associated with daily rebalancing and compounding in volatility products. These products are designed for short-term trading, not long-term holding, a characteristic often misunderstood by retail investors. The performance indicates that market conditions were particularly unfavorable for both inverse and leveraged long volatility strategies over these periods, likely due to the complex dynamics of VIX futures pricing (contango/backwardation) and the daily rebalancing decay.

Comparison to Industry Standards

• The performance of SVIX and UVIX, with substantial NAV per share declines (4.45% and 83.2% respectively in 2025), is typical for leveraged and inverse volatility products held over extended periods, which are known for significant decay due to daily rebalancing and compounding effects, especially in volatile or trending markets.
• Comparable products, such as ProShares Ultra VIX Short-Term Futures (UVXY) or ProShares Short VIX Short-Term Futures (SVXY), often exhibit similar long-term decay patterns, making direct comparisons of absolute returns less meaningful than understanding the underlying mechanics.
• The stated investment objective of achieving daily investment results, not for periods longer than one day, aligns with the design of most leveraged and inverse ETFs in the industry, emphasizing their unsuitability for buy-and-hold strategies.
• The management fees (1.35% for SVIX, 1.65% for UVIX) are within the typical range for actively managed or complex derivatives-based ETFs, which often have higher expense ratios due to the specialized nature of their strategies and underlying instruments.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Experienced significant declines in NAV per share for both SVIX and UVIX, particularly UVIX, indicating substantial investment losses. The daily rebalancing and compounding risks are explicitly highlighted as factors affecting longer-term performance.
• Employees: The Trust has no employees; however, the Sponsor's employees are subject to the insider trading policy and the new compensation recovery policy (if incentive-based compensation is ever awarded).
• Sponsor (Volatility Shares LLC): Receives management fees (1.35% for SVIX, 1.65% for UVIX) which increased in 2025, indicating continued revenue despite fund performance. Bears additional compliance obligations and costs due to CPO registration.
• Authorized Participants: Continue to facilitate creation and redemption of Creation Units, incurring transaction fees. Their ability to sell shares to the public is crucial for market liquidity.

Next Steps

• The Sponsor will continue to monitor systems and processes to mitigate potential cybersecurity risks actively.
• The Trust will review its 'Policy Relating to Recovery of Erroneously Awarded Compensation' as needed to comply with changes in regulations or best practices.

Key Dates

Recommendation

The severe and consistent decline in Net Asset Value per share for both SVIX (-4.45% in 2025, -32.80% in 2024) and especially UVIX (-83.2% in 2025, -75.3% in 2024) indicates a fundamental flaw in their long-term investment viability for most investors. The explicit warnings about compounding and correlation risks, stating that the funds are not suitable for holding periods longer than one day, underscore their highly speculative nature. Despite an increase in total net assets for the Trust, this appears to be driven by new capital inflows rather than strong operational performance, masking the significant per-share value destruction. The substantial net loss for UVIX in 2025 further reinforces the negative outlook. A seasoned investor would recognize these products as highly complex, extremely risky, and generally unsuitable for sustained investment, warranting a strong sell recommendation for any existing positions and avoidance for new ones.

Keywords

VIX Futures ETF, Volatility Shares LLC, SVIX, UVIX, SEC 10-K, VIX Index, Commodity Pool Operator, Leveraged ETF, Inverse ETF, Financial Reporting, Derivatives, Futures Contracts, Options Contracts, Swap Agreements, Risk Management, Corporate Governance