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How to hedge volatility with ETFs

PowerShares S&P 500 Downside Hedged Portfolio PHDG

This actively managed fund seeks to deliver positive returns in rising or falling markets that are uncorrelated to broad equity or fixed-income market returns. It tries to follow the S&P 500 Dynamic VEQTOR Index, which provides broad equity market exposure with an implied volatility hedge by dynamically allocating between different asset classes: equity, volatility and cash. The S&P 500 Total Return Index represents the equity component while the S&P 500 VIX Short-Term Futures Index represents the volatility component of the index. The non-equity (volatility + cash) portion makes up for one-fourth of the portfolio while the rest goes to equity. The fund has accumulated $24.2 million in its asset base and charges 39 bps in fees per year from investors. Volume is light exchanging 3,000 shares a day on average.

Bottom Line

Investors can definitely shield their portfolio against volatility with the help of the above-mentioned products. These provide dynamic exposure according to the level of market volatility. These are least affected by any market turmoil and could prove to be great choices when it comes to offering protection against market downturn.

BARCLY-SP VEQTR (VQT): ETF Research Reports

PWRSH-SP5 DHP (PHDG): ETF Research Reports

DELS-SP5 MG RSK (DMRL): ETF Research Reports

JNS-V TR HEDG (SPXH): ETF Research Reports

NATWD-R-B US EQ (RBUS): ETF Research Reports

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