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Alternative Market Briefing

Quadratic Capital Management debuts first of its kind fixed income ETF

Wednesday, May 15, 2019

Bailey McCann, Opalesque New York:

Quadratic Capital Management has launched a first of its kind fixed income ETF that uses OTC fixed income options. Quadratic Interest Rate Volatility and Inflation Hedge ETF (NYSE Arca: IVOL), is designed to profit from an increase in fixed income volatility and profit from a steepening of the yield curve, whether that occurs via rising long-term interest rates or falling short term interest rates.

IVOL is long interest rate volatility via its access to the OTC fixed income options market. No other active or passive ETF has provided its investors access to this market before. Over the counter (OTC) options are contracts between institutional investors and large financial services firms that are traded via a dealer network as opposed to on a centralized exchange.

The fund is managed by Quadratic's Founder and Chief Investment Officer Nancy Davis and is the first ETF for the firm.

"Making this strategy available in an ETF really democratizes access to the OTC fixed income options market," Davis said in an interview with Opalesque. "It's likely that institutionally focused investors are going to be the biggest users of IVOL because their biggest risks are increases in volatility and inflation and this hedges both. But, ETFs are available to everyone so any investor who wants this exposure can add it to their portfolio."

IVOL uses a combination of Treasury InflationProtected Securities (TIPS) and dynamically managed OTC......................

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