What kind of inverse fund is Barclays’ new XXV offering?

Update: I do not believe XXV is a good way to short VXX, or volatility in general.  It has very little upside remaining (maximum value will be $40/share),  see this post for more details.

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We know that Barclays’ XXV is intended to be an inverse fund of VXX, but there is some confusion regarding what kind of inverse it will be.   Will it be the equivalent of shorting VXX, or will it be an inverse percentage fund—trying to deliver the inverse percentage moves of VXX day to day?   I’m hoping for the former, because the inverse percentage funds are inferior over the long term to the performance of a short style position, especially in choppy markets.   I’m sure the Barclays’ strategy is correctly stated its EDGAR filing, but smarter people than I have looked at it and come up with different answers.

With a whopping 10 days of data it looks like the shorts probably have it.   The percentage chart below has the sign inverted on the XVV results to make it easier to compare to the VXX moves.   If XXV is trying to be an inverse percentage fund its performance on the 26th and 30th was pretty poor.  On the other hand, it was pretty good performance in order to emulate a VXX short.

The second chart shows the difference in results between 100 shares of XVV bought on its first day of trading (19-July-2010) vs a simulated inverse VXX percentage style fund.