ETF Trends
ETF Trends

Exchange traded funds now offer ways for investors to utilize institutional styled strategies to help ride changing market conditions. For instance, VelocityShares recently launched two new hedged-equity products that help mitigate market volatility.

On Monday, the VelocityShares Volatility Hedged Large Cap ETF (NYSEArca: SPXH) and the VelocityShares Tail Risk Hedged Large Cap ETF (NYSEArca: TRSK) began trading.

SPXH tries to reflect the performance of the VelocityShares Volatility Hedged Large Cap Index, which hedges “volatility risk” in the S&P 500. Essentially, the fund takes a long position in the S&P 500 and a short position in short-term VIX futures, and it tries to target a net neutral exposure. The fund has a 0.71% expense ratio.

The ETF’s current holdings include Vanguard S&P 500 ETF (NSYEARca: VOO) 33.5%, iShares CORE S&P 500 ETF (NYSEArca: IVV) 33.4%, SPDR Trust Series 1 (NYSEArca: SPY) 33.3% and a -18.3% position in S&P 500 VIX Futures VAR L/S Index TRS.

TRSK tries to reflect the performance of the VelocityShares Tail Risk Hedged Large Cap Index, which is designed to hedge the “tail risk” – normal distributions beyond three standard deviation, or more skewed distributions – in the S&P 500. The fund also takes a long position in large-cap equities and a short position in VIX futures. The ETF has a 0.71% expense ratio.

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