Hi Stephen,
The VIXY would be a good hedge against a sudden market downturn. Any investment that is considered defensive in nature, or that is inversely correlated to the markets should do well in a another crash. That includes defensive asset classes like gold and even cryptocurrency (bitcoin) which is about to hit new all-time highs.
There are actually Inverse ETFs that are built to do the opposite of what the markets are doing. So in a market crash, these will do quite well. A couple of examples include:
• BetaPro S&P/TSX 60™ Daily Inverse ETF (HIX)
• BetaPro S&P 500® Daily Inverse ETF (HIU)
The are built to do the exact opposite of the market - so a 1% decrease in the market would result in a 1% increase in these ETFs.
Although it is always good to plan ahead, usually meltdowns are ones we don't see coming. So if the market continues to do well, holding inverse ETFs could result in significant losses. Using HIU as an example, although it outperformed over a short period in March, it has since declined and is down 24% YTD. Just make sure you understand the risks associated with these types of products.
Mat