A New ETN To Hedge In Volatile Markets

On Wednesday, the newest weapon in Barclay’s arsenal, the Barclays ETN+ S&P Veqtor Exchange Traded Note (VQT), began trading giving investors yet another way to hedge against volatility in the S&P 500.

The new ETN, which is a type of unsecured, unsubordinated debt security, tracks the S&P 500 Veqtor Index, which provides broad equity market exposure with an implied volatility hedge by allocating between equity, volatility, and cash.  The Index allocates assets among the S&P 500 Index, the S&P 500 Short-Term VIX Futures Index and cash.  Furthermore, the ETN carries an expense ratio of 0.95%.

The release of this new ETN comes at a time when investors continue to remain wary of a double dip recession and a sustainable economic recovery, both of which are enhancing volatility in the equity markets.

Barclays is no stranger to offering products that are linked to volatility as that they also offer the Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN (XXV), the iPath S&P 500 VIX Short-Term Futures ETN (VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (VXZ) as ways to hedge against volatility and play the VIX, which is the Chicago Board Options Exchange’s volatility index that tracks the price investors are willing to pay for options on the S&P 500 index.  The VIX is known to be a barometer of fear in the markets in that as the VIX rises, so does fear. 

Disclosure: No Positions

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About etftutor
Kevin Grewal is the founder, editor and publisher of ETF Tutor and serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was a quantitative analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton. He is contributing author on The Street - his articles can also be found published on various sites including Yahoo! Finance, The Globe and Mail , Daily Markets, MSN Money, Seeking Alpha, Fidelity Investments, Traders Library, and Minyanville. Prior to this, Mr. Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds

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