The VIX is currently at around 18.
Allocations to the VIX will help diminish hedging costs by limiting the number of VIX calls purchased during periods of low expected volatility. On the flip side, VIXH is expected to profit during periods of high volatility.
Top holdings include Apple (NasdaqGS: AAPL) 5.0%, Exxon Mobil (NYSE: XOM) 3.2%, Microsoft (NasdaqGS: MSFT) 1.8%, International Buisnes Machines (NYSE: IBM) 1.8% and Chevron (NYSE: CVX) 1.8%.
Sector allocations include: consumer discretionary 10.9%, consumer staples 11.1%, energy 11.2%, financials 14.3%, health care 11.7%, industrials 10.1%, information technology 20.2%, materials 3.3%, telecom services 3.2% and utilities 3.5%.
“The lesson of the 2008 global financial crisis is that a single severe market shock can devastate entire portfolios and wipe out many years of market gains,” Robert Carey, CFA, Chief Market Strategist of First Trust, said in the press release. “Given the surge in interest in tail risk and tail risk hedging in the wake of that crisis, we believe this is an ideal time to launch a Fund offering long-term investors a convenient way to attempt ot hedge against the risk of similar extreme market events.”
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.