You can see that Over a long enough period of time the return is essentially the same. XIV is faster to the downside and faster to the upside. Ziv Is slower to both, but both follow the same trend. OK...So Bonds.
What I have learned is that when there is a really big spike in VIX, an event causes the market to sell off, or if the market just decides to go down hard, there is a rush to bonds. Which create a great hedge. Look at the chart below of $EDV which is the extended duration bond ETF from VANGUARD. As you can see when the market tanked 18% in the summer of 2011, Ziv was hit bigtime, and EDV rallied enough to hedge the entire loss if not create a gain. As you can see, bonds have a long term trend line that is up, but have spike up, every time the market tanks. Very important.
Keeping a position in both ZIV and EDV over the last few years (a bull market), you will need to re-balance. VIXTANGO members can feel free to EMAIL and ask question on how to re-balance, how often to re-balance, what percentages to hold, and how to get the best Sharpe ratio in your portfolio.
Feel Free to do some backtest on ETF REPLAY