(Bloomberg) -- With worries over US trade policy roiling Wall Street, JPMorgan Chase & Co. is repackaging a well-known strategy that would profit if the turbulence subsided.

The Inverse VIX Short-Term Futures ETNs, ticker VYLD, provides exposure to an index shorting futures tied to Wall Street’s fear gauge, known as the CBOE Volatility Index or VIX.

These kinds of products have had a spotty history on Wall Street, following several high-profile blowups that came when calm markets suddenly went haywire. Their mechanics can be difficult for even sophisticated investors to understand and market participants have pointed out past design flaws that ramped up risk, though strategies have evolved in recent years to offer protective buffers.

The JPMorgan investment-bank strategy is designed to gain 1% for every point that VIX futures fall, before accounting for fees and returns on cash. It works by scaling up exposure to futures when markets grow turbulent, allowing investors to benefit if volatility subsequently falls.

“This is a unique situation,” said Todd Sohn, senior ETF strategist at Strategas. “Shorting volatility — through a structure that really doesn’t see much attention anymore: an ETN.”

Concerns over how White House tariff policies will impact US growth and inflation have dragged the S&P 500 nearly 8% from its record high and sent the VIX hovering above its 10-year average for the last four weeks. Still, investors looking to use products such as VYLD to bet that things will get less turbulent from here will have to face some unnerving history.

In a 2018 event dubbed “Volmageddon,” the VelocityShares Daily Inverse VIX Short-Term ETN imploded after dropping more than 90% in a single session, while the VelocityShares Daily 2x VIX Short-Term ETN (TVIX) was delisted during the pandemic. In 2022, Barclays Plc spurred wild price moves after it committed a blunder on two popular exchange-traded notes. A global market selloff sparked by an unwind of the Japanese yen carry trade caused a rapid spike in the VIX last year, though the index quickly reversed that move.

Nevertheless, JPMorgan has seen “increased interest from the market for volatility products over the last few years,” it said in emailed comments.

Analysis showed the new product “would’ve delivered a similar overall return profile to remaining short VIX products, but with significantly less drawdown during out-of-the-blue corrections,” said Brandon Igyarto, JPMorgan’s head of Americas structured investment distributor marketing.

A Different Beast

Part of the risk in ETNs stems from the fact that — unlike exchange-traded funds — they are unsecured debt obligations backed by the issuer rather than their underlying assets. Since they frequently use derivatives to amplify returns, the products are vulnerable to extreme market events that can lead to swift losses. Most are designed to be held for short periods.

Rocky Fishman, founder and chief executive of the research firm Asym 500, said that short VIX futures can play a meaningful role in a portfolio as long as they are properly managed. A hypothetical inverse VIX futures strategy would have lost about three-quarters of its value over the past 10 years, while one that holds Treasuries would have gained 10% on a total-return basis. But a 50-50 mix of the two — with active rebalancing — would have yielded a 165% gain during that stretch, according to his calculations.

Existing volatility products have mixed track records when it comes to recent investor interest. Only four of the 10 such products available for trading in the US have seen inflows this year, with the 1x Short VIX Futures ETF (SVIX) the only one to grab around $100 million. The vehicles in total have around $2.5 billion in assets under management.

While JPMorgan oversees more than 60 exchange-traded funds in the US under its asset management arm, the parent company has just one other ETN trading currently, according to data compiled by Bloomberg.

Strategas’ Sohn said betting against volatility remains a popular trade, despite the challenges.

“But it’s risky when the market cascades,” he added.

--With assistance from Sam Potter.

(Adds context on new strategy in fourth paragraph)