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Alternative Market Briefing

VelocityShares launches two hedged equity ETFs

Tuesday, June 25, 2013

Bailey McCann, Opalesque New York:

VelocityShares LLC, developer of exchange traded products (ETPs) has launched two new exchange traded funds (ETFs) providing a sophisticated long/ short volatility strategy combined with a large cap equity allocation. Both VelocityShares Volatility Hedged Large Cap ETF (SPXH) and VelocityShares Tail Risk Hedged Large Cap ETF (TRSK) went live this morning. The announcement follows the firm's may licensing of the VelocityShares Volatility Hedged Large Cap Index and the VelocityShares Tail Risk Hedged Large Cap Index.

The new ETFs are indended to combine an 85% exposure to a US large cap equity portfolio with a 15% exposure to a volatility strategy, rebalanced every month. Both volatility strategies are designed to provide long/short exposure to VIX futures and potentially benefit from the interaction between the dynamics of the VIX futures curve and the convexity generated by using daily resetting instruments.

The launches are the next step in for the firm which has other products planned for later in the year. TRSK utilizes a volatility strategy which tries to hedge tail risk events in the S&P 500, at a potentially higher cost during normal market conditions, by targeting a slightly long volatility bias. SPXH utilizes a volatility strategy which also tries to hedge large volatility events in the S&P 500, while retaining upside potential during normal market conditions, by targeting a neutral volatility bias. The products are......................

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