Barclays Capital, the investment banking division of U.K.-based Barclays Bank PLC, today rolled out the first inverse exchange-traded note tied to VIX volatility futures, a tool designed to give investors a way to bet that market volatility will remain low.
The rollout of the Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN (NYSEArca: XXV) brings to three the number of ETNs Barclays is marketing that are tied to the so-called fear index, which spikes when the S&P 500 plunges. All three products have expense ratios of 0.89 percent a year.
"Investors are increasingly looking for diversified ways to access equity market volatility," Philippe El-Asmar, head of Investor Solutions at Barclays Capital, said in a press release. "We are pleased to provide them with the first exchange traded product that allows them to express a bearish view on volatility."
The new ETN is linked to the inverse performance of the S&P 500 VIX Short-Term Futures Index Excess Return. The index is designed to reflect returns that are potentially available through an unleveraged investment in short-term futures contracts on the CBOE Volatility Index, known as VIX Futures.
XXV is an uncollateralized debt obligation of Barclays Bank PLC with a 10-year maturity.
The other two VIX ETNs backed by Barclays are the iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (NYSEArca: VXZ).
The two ETNs were the second- and third-best performers among U.S. exchange-traded products on Friday, as volatility returned to the U.S. market stock market amid weak corporate earnings and economic data, according to data compiled by IndexUniverse.com.
A fourth VIX-related product, an ETF from Jefferies Asset Management that’s in the works, is well into its registration process at the Securities and Exchange Commission. The proposed Jefferies S&P 500 VIX Short-Term Futures ETF (NYSEArca: VIXX) will also have an expense ratio of 0.89 percent. Jefferies is a Stamford, Conn.-based money management firm known for its commodity ETFs.
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