ETF Chart of the Day: A Unique Volatility-Linked Product
October 4th 2011 at 10:51am by Paul Weisbruch, Street One Financial
In examining year to date returns in the nearly 900 equity based exchange traded products, we are hard pressed to find gains outside of those funds that are structured to be “short,” or those that profit in falling markets.
However, an exchange traded note that largely flies under the radar has attracted interest recently and has registered impressive returns.
Barclays ETN+ VEQTOR ETN (NYSEArca: VQT) listed last summer and aims to dynamically allocate across there categories including equities, volatility, and cash and is clearly a unique offering. (See more on the S&P tracking index)
Many of the funds that would be considered “alternatives based” such as VQT are often misunderstood by the ultimate end users, investors and portfolio managers.
Since inception VQT has gained 19.08% and year to date the fund is up 12.60%. Trading volume had been virtually nonexistent until early August where the fund really began to shine during the initial equity markets’ downdraft.
The fund rallied, largely due to strategic positions in volatility in advance of the meteoric rise in the VIX amidst investor panic, and trading volume has picked up significantly in the fund ever since.
In fact, last Thursday, 600,000 shares traded in VQT versus average daily volume of about 33,000 shares. It appears that with some seasoning and awareness along with impressive live performance, VQT has opened the eyes of investors and portfolio managers that desire exposure to an alternatives type strategy within an ETN wrapper.
Barclays ETN+ VEQTOR ETN
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