Barclays iPath ETNs trade ‘more than Vodafone’
Volumes of trading in volatility products such as Barclays’ Short Term iPath exchange traded notes (ETNs) have soared in recent days – benefiting investors even as markets have turned sharply down.
The iPath S&P 500 VIX Short-Term Futures ETN is up almost 40% since 1 July, according to figures from Barclays. The iPath VSTOXX Short-Term Futures ETN is up almost 24% in the same period.
Nathan Bance (pictured), director Investor Solutions at Barclays Capital, said one product alone hit trading volumes of $400m on Friday, 5 August, more than the turnover of Vodafone.
He says the spike in interest comes as investors are not only recognising volatility as an asset class, but are becoming more interested in playing it separately from other alternative investment strategies.
The chief benefit in the current environment is its non-correlation to other assets. Bance said gains of about 20% from an iPath Ucits III compliant product came at a time when markets generally were down 12-13%.
“It gives people a black swan gap filler,” he said.