Janus Group added on to its VelocityShares exchange traded note suite with two new options to trade on volatility in European markets.
On Wednesday, Janus rolled out the VelocityShares 1X Long VSTOXX Futures ETN (BATS: EVIX), which is linked to the VSTOXX Short-Term Futures Investable Index USD, and the VelocityShares 1X Daily Inverse VSTOXX Futures ETN (BATS: EXIV), which is linked to the VSTOXX Short-Term Futures Inverse Investable Index USD. Both EVIX ans EXIV come with a 1.35% expense ratio.
EVIX and EVIX reflect indices based on VSTOXX Short-term Futures, a widely observed measure of European equity market volatility, similar to what the VIX or CBOE Volatility Index does based on U.S. equity market volatility.
Specifically, the VSTOXX Short-Term Futures Investable Index tries to reflect the performance of a long position in a portfolio of VSTOXX futures to provide exposure to constant-maturity one-month forward, one-month implied volatilities on the underlying EURO STOXX 50 Index. Due to its long exposure to VSTOXX futures, the EVIX will likely increase in value when the volatility of European equities rises and more likely decrase in value when volatility of European equities diminishes.
Meanwhile, the VSTOXX Short-Term Futures Inverse Investable Index tries to reflect the performance of a short or inverse position in a portfolio of VSTOXX futures designed to provide exposure to constant-maturity one-month forward, one-month implied volatilities on the same underlying index. Due to its short exposure to VSTOXX futures, EXIV is likely to rise in value when volatility of European equities dissipates and likely to dip in value when volatility in European equities increases.
“VelocityShares brought U.S investors the first ETPs providing inverse exposure to VIX futures, now broadly used by a wide range of sophisticated investors,” Nick Cherney, Senior Vice President, Head of Exchange Products for Janus Capital Group, said in a note. “The launch of EVIX and EXIV is in response to strong demand from our clients to have similar products with exposure to European volatility. VSTOXX is the premier measure of European equity volatility, and we are very pleased to be able to bring these products to market with UBS, STOXX, Eurex, and BATS.”
Potential investors should also be aware that these ETNs track futures contracts and not the spot price of European Volatility Index. Consequently, the long/inverse ETFs will be subject to the effects of negative effects of contango in the futures markets.
For more information on new fund products, visit our new ETFs category.