Source and Nomura form partnership for volatility ETF

Specialist exchange-traded products provider Source and Japanese banking group Nomura have partnered up to offer Europe’s first volatility-linked ETF.

Open for trading from yesterday but formally launched today, Tuesday 19 April, the Nomura Voltage Mid-Term Source ETF tracks the Nomura Voltage Strategy Mid-Term 30-day USD TR index.

The fund is being marketed to European investors and is listed on the London Stock Exchange. It is available in US dollars.

The Dublin-domiciled product takes a tactical approach to volatility, aiming to capitalise on spikes in distressed markets. Costs associated with a constant long volatility position will meanwhile be lowered, said Source.

It is designed to complement the S&P 500 VIX Futures Source ETF, launched last year as the first ETF giving volatility exposure to the relevant index.

Allocation can be between 0% and 100%, depending on the volatility of the index. As relative volatility increases, so too does the allocation, described by Source as “a reactive tactical model”.

It is the latest of 91 products launched by ETF specialist Source. The firm will use its pan-European sales team to promote the fund, and Nomura will also market it separately.

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