Since we are mired in a “low volatility” market at least as far as most conventional measures suggest and most pundits would agree, we might as well cover an ETP strategy that focuses on “High Volatility” at least as far as its strategy is concerned.
HVPW (U.S. Equity High Volatility Put Write Index, Expense Ratio 0.95%) launched in February of 2013 and has raised about $65.9 million since inception, averaging a good 79,000 shares or so, on a daily trading basis.
Most databases classify the product in the broader category of “Alternatives,” and the strategy according to fund literature reads: “the Index reflects the performance of a portfolio of exchange-traded put options on a selection of the largest capitalized stocks which also have listed options and which have the highest volatility, as determined by the NYSE Arca Inc., the Fund’s index provider.”
We have spoken about income oriented investors whom undoubtedly have been in the market for various Fixed Income, MLP, and REIT ETP strategies to name a few, judging by the notable asset growth we have seen here across the board in recent years.
The fund’s yield is currently 9.63%. Next, when we looked at the short put holdings (June expiration options) in the fund we see a common theme, many “newly” or relatively newly publicly traded companies. I.E. some of the top short put positions are in names like FEYE, SPLK, P, and SCTY, all relatively new to the publicly traded equity market and many of these stocks have exhibited extreme volatility on both sides in a relatively short amount of time.