Jan. 1, 2014 AUM: $1.35 million
2014 Inflows: $29.7 million
2014 Fund Growth: 2,197 percent
TRSK is an interesting fund that targets long U.S. equity exposure, with a complex long/short VIX overlay strategy aimed at reducing downside risk. Despite its use of leverage in its VIX futures overlay, we classify TRSK as a U.S. large-cap ETF.
Eighty-five percent of the fund is equally weighted between three popular S&P 500 ETFs. The remaining 15 percent is allocated to a 2X long VIX futures and a -1X short VIX futures position, targeting a 35 percent net long VIX futures exposure. The short VIX position is meant to offset decay costs, which can be steep over time, from any contango in the long VIX futures position.
TRSK, which charges 71 basis points, had a slow start when it launched in June 2013. At the beginning of the year, it only had $1.4 million in AUM, but it’s made a big comeback thus far in 2014. While liquidity has also picked up, it’s still thin, trading $16,000 on most days at 25 basis point spreads, so careful trading is still warranted here.