Yet while retail investors, which traditionally prefer ETPs to hedge exposure, have been loading up on crash bets, institutional investors which traditionally prefer the greater liquidity of the futures market, are taking the other side of the volatility trade and as the latest CFTC commitment of traders report shows, the speculative net short position in VIX futures is approaching a record,
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And so the question emerges: who is right – retail investors, who are not only pulling billions from equity funds but have pushed their crash bets to all time highs via VIX ETPs, or institutions, who oddly are on the other end of the spectrum, and not are complacent to an almost record degree, but in their pursuit of yield and carry trades have pushed the net VIX futs short position to unprecedented levels. And while conventional wisdom would say that institutions, i.e., the smart money is always right, for the 9th year in a row, hedge funds and their peers are underperforming the market (with macro funds getting demolished once again).
https://www.zerohedge.com/news/2019-04-13/war-has-broken-out-vix-complex