VelocityShares Files For Its First ETFs

By
Olly Ludwig
September 21, 2012
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The ETN sponsor is looking to expand into ETFs with U.S. hedged and emerging market equities funds.

 

VelocityShares, the money management firm known so far for its family of volatility-focused ETNs, has filed regulatory paperwork detailing its first five ETFs—a duo of hedged large-cap equity funds and a separate trio of equities funds focused on different pieces of the emerging markets universe.

The company has around $770 million in assets in its family of volatility ETNs, but has long intended to enter the world of ETFs. It is doing  so via ALPS, the Denver-based fund distribution firm that also sponsors a number of ETFs, including the $4 billion Alerian MLP ETF (NYSEArca: AMLP).

The two separate filings were made under the ALPS ETF Trust name, and VelocityShares is responsible for the creation of the specific indexing strategies involved in the hedged large-cap funds, while the emerging markets funds have indexes from BNY Mellon, the filings said.

The hedged large-cap funds, which will be funds-of-funds composed of ETFs are:

  • VelocityShares Tail Risk Hedged Large Cap ETF
  • VelocityShares Volatility Hedged Large Cap ETF

 

The emerging markets strategies, each of which will focus on relatively liquid global depositary receipts listed in London, are:

  • VelocityShares Emerging Markets Depositary Receipt ETF
  • VelocityShares Russia Select Depositary Receipt ETF
  • VelocityShares Emerging Asia Depositary Receipt ETF

 

The filing didn’t specify ticker symbols or expense ratios for any of the funds, but did say the emerging markets ETFs would have primary listings on the Nasdaq stock exchange.

Hedged Strategies

The pair of large-cap hedged strategies will each be composed of the same five underlying ETFs—and at the same percentages, namely 85 percent equities and 15 percent volatility exposure. The 85-15 scheme will be rebalanced monthly, according to the prospectus.

But, crucially, the specific volatility-fund allocation schemes will differ in the “Tail Risk Hedged” and “Volatility Hedged” funds.

So, all the ETFs, which will again all be the same in both proposed large-cap funds, are:

  • SPDR S&P 500 ETF (NYSEArca: SPY)
  • Vanguard S&P 500 ETF (NYSEArca: VOO)
  • iShares S&P 500 Index Fund (NYSEArca: IVV)
  • ProShares Ultra VIX Short-Term Futures ETF (NYSEArca: UVXY), a double-exposure long volatility fund focusing on the short end of the VIX futures curve
  • ProShares Short VIX Short-Term Futures ETF (NYSEArca: SVXY), a single-exposure short volatility fund that’s also focused on the short end of the VIX futures curve

 

ETF DAILY DATA

The consumer discretionary fund 'XLY' garnered a $1 billion-plus blast of creation on Tuesday, March 3. Still, a falling market offset net inflows and pulled total U.S.-listed ETF assets down to $2.092 trillion.

'VCR,' the consumer discretionary fund, paced Vanguard's issuer-leading inflows on Tuesday, March 3, as total U.S.-listed ETF assets ended the day at $2.092 trillion.

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