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VelocityShares launches two hedged equity ETFs

BBR Staff Writer Published 25 June 2013

VelocityShares has launched two new exchange traded funds (ETFs), Volatility Hedged Large Cap ETF (SPXH) and Tail Risk Hedged Large Cap ETF (TRSK), which offer a long/short volatility strategy combined with a large cap equity allocation.

Designed to integrate an 85% exposure to a US large cap equity portfolio with a 15% exposure to a volatility strategy, these ETFs seek investment results that correspond generally to the performance, before fees and expenses, of its underlying index.

The ETFs use volatility strategies to improve portfolio quality and offer long/short exposure to VIX futures, while benefitting from interaction between the dynamics of the VIX futures curve and the convexity generated by using daily resetting instruments.

The volatility strategy used by TRSK tries to hedge tail risk events in the S&P 500, at a potentially higher cost during normal market conditions, by targeting a slightly long volatility bias.

SPXH's volatility strategy also tries to hedge large volatility events in the S&P 500, while retaining upside potential during normal market conditions, by targeting a neutral volatility bias.

Both volatility strategies use a purely systematic, signals-free approach, to build effective long and short volatility positions with desirable cost/benefit characteristics.

The VelocityShares Group includes VLS Securities, a US-registered broker-dealer and wholly owned subsidiary of VelocityShares.