Horizons BetaPro unveils US volatility ETFs

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Volatility ETF comes to Canada

Horizons BetaPro (HBP) has launched the first Canadian ETFs to track the S&P Vix 500 Short-Term Futures index, a measure of US stock market volatility.

The launch includes the Horizons BetaPro S&P 500 Vix Short-Term Futures ETF - the Single Vix - and the Horizons BetaPro S&P 500 Vix Short-Term Futures Bull Plus ETF - the Double Vix.

The Double Vix ETF is breaking additional ground as the world's first two-times leveraged ETF on the S&P Vix S-T Index, according to HBP.

BetaPro president Howard Atkinson says the launch means Canadian investors need not necessarily be afraid of stock market volatility.

The S&P Vix S-T index is a volatility benchmark comprised of first and second month futures contracts based on the Chicago Board of Exchange's Vix index, and is designed to reflect the market's expectation of future volatility within the US stock market.

Atkinson says: "You cannot invest directly in CBOE's Vix index, but our ETFs will allow investors to access the volatility of the S&P 500 index."

The company says that sharp spikes in market volatility only occur over short periods of time and stresses that the funds should be used for short periods of time and monitored on a daily basis.

As a leveraged fund, the HBP Double Vix ETF does not seek to achieve its investment objective over a period greater than one day.

Both funds were listed yesterday on the Toronto Stock Exchange and will hedge US dollar losses or gains back to the Canadian dollar as well as possible.

Index provider Standard and Poor's (S&P) announced in October its plans to launch the volatility index in Canada following the success of the S&P 500 Vix futures indexes in the US, which form the basis of $3 billion of exchange-traded notes (ETNs). (See 'Standard & Poor's to introduce Vix volatility to Canadian investors'.)

The S&P/TSX 60 Vix Index is being created in partnership with TMX Group, which operates the Toronto Stock Exchange and the Montreal Stock Exchange. The two exchanges are working on listing futures on the TSX 60 Vix and then S&P will create an investable index using the futures.

Part of this article first appeared on www.ifaonline.co.uk

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