Since Credit Suisse’s recent pause on TVIX share creations I have been trying to figure out some of the hedging / rebalancing dynamics underlying the current crop of volatility ETNs and ETFs. Traditional equity ETFs like SPY, the S&P 500 index tracking fund don’t require much behind-the-scenes action. Shares are created or redeemed in conjuction with baskets of securities changing hands. The only dynamic part …
Gold, loved by many and disdained by at least a few (including Warren Buffett) is an unusual investment. It won’t grow, doesn’t offer a dividend, and other than jewelry and some industrial uses it gets stuck in guarded vaults for safe keeping. With no positive cash flow associated with it, the value of gold is whatever the market says it is. In the past …
In February 2012 VelocityShares‘ TVIX ETN was on a tear. Its volume surged from an average of 6.67 million shares a day in January to 22 million shares a day in February. The assets under management (AUM) also grew dramatically. At the end of January TVIX had $413 million in assets—fourteen days later it has $279 million more for a total of $691.0 million. Credit …
IRAs are attractive to investors because they enable taxes on dividends and profits to be deferred (traditional IRA) or avoided (Roth). To a large degree, you can do the same trades in an IRA that you can do in your regular accounts. However there are significant differences, and the differences change over time as brokers adjust their policies and their software. I’ve tried …
There are over 2800 ETFs right now, with more in registration. This explosion of alternatives is great for driving down fees and giving investors choices. However once we figure out what we want to buy, we often discover the fund we chose is lightly traded—perhaps only hundreds of shares are traded on any given day. With a lightly traded fund, the bid/ask spread is usually …
