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Rating:Black Swans Do Exist, or So Bets First Trust Advisors Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, August 30, 2012

Black Swans Do Exist, or So Bets First Trust Advisors

News summary by MFWire's editors

FinAlternatives has picked up on a story covered by Stork and Reaper back in mid-July about First Trust prepping the CBOE S&P 500 VIX Tail Hedge Fund.

The new ETF is designed to take advantage of any "black swan" event and positioned to compete against 20 or so hedge funds. The ETF will trade under the ticker VIXH and will charge a management fee of 60 basis points.

The ETF will peg to the S&P's 500 Index and call options on the CBOE Volatility Index.

First Trust's product managers and legal eagles write in the prospectus, "A steep and sudden drop in equity market prices, such as a downward move of 20 percent of more in a month, is thought of as an unlikely or 'tail' occurrence. The index is designed to help cope with these extreme downward movements in the market by hedging its portfolio through purchasing call options on the VIX Index, or 'tail hedging.'" 

Edited by: HFD

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