Visitors Now:
Total Visits:
Total Stories:
Profile image
By ETF Daily News (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

This Short Volatility Fund Is Benefitting From The VIX Purge

Monday, November 21, 2016 11:17
% of readers think this story is Fact. Add your two cents.

(Before It's News)

We spent some time this morning in our ETF Fund/Flows piece covering the fact that a handful of “Long Volatility” ETPs are all trading at all-time lows today, but there’s another VIX-linked inverse product that’s been on the rise recently.

Not only is tied to the VIX itself trading at lower levels lately, but the presence of “contango” in the VIX futures market has led to popular ETPs like the VXX falling precipitously over the long term. Contango has historically proven itself to have negative returns on Futures based “Long Volatility” ETPs over time — not to mention many leveraged commodity products as well.

On the other hand, an under-covered “Inverse Volatility” ETP that we have not previously mentioned in this space popped up this morning, XIVH (VelocityShares VIX Short Volatility Hedged ETN, Expense Ratio 1.30%). The fund only debuted in July of this year and remains small in terms of asset size $31 million and average daily trading volume (just 500 shares) but it has nonetheless done well lately with the fall in the VIX.

XIVH

As of data provided 11/18/16, we see that the underlying portfolio of XIVH has a significant 93% weighting to “Short Volatility” and 7% weighting to “Long Volatility.” According to the fund’s investment strategy provided by ETFdb.com, the index that XIVH tracks is known as the “S&P 500 VIX Futures Short Volatility Hedged Index” which “Seeks a target exposure of a 10% two times leveraged long position and a 90% unleveraged short position in the Short-Term Futures Index. That results in a net short position in VIX futures.”

Clearly at the present time, XIVH is leaning shorter than its target exposure and thus benefitting from market conditions favoring a depressed VIX.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.