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This paper investigates if and how the fund flows to VIX exchange-traded funds (ETFs) and VIX exchange-traded notes (ETNs) impact the underlying volatility VIX index. The VIX ETFs and ETNs are divided into four groups depending on their investment strategy. We found that each group has a very distinctive fund flow pattern, reflecting the mean-reverting character of the VIX. We found that generally higher fund flows to VIX exchange-traded funds and notes which apply a normal tracking strategy tend to increase the value of the VIX, while higher fund flows to VIX exchange-traded funds and notes which apply an inverse tracking strategy decrease the value of the VIX. Moreover, we show that money flows to VIX exchangetraded products is insufficient to contribute to market instability during market downturns. The results of this study provide arguments for discussion on impact of exchange trade products on their underlying products (see .

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