Many of the 1600+ Exchange Traded Products (ETPs) on the market are low volume, low asset offerings that either implement failed strategies or have bigger, higher volume competitors. However, some low volume ETPs offer unique opportunities you won’t want to wait for. I’ve organized the special handling required for low volume funds into these categories: Alternatives Before you buy When you buy While you’re holding …
It’s disconcerting when the Exchange Traded Fund (ETF) you’re interested in has low trading volumes. Days can go by with no volume at all. If it was a small cap stock you wouldn’t consider buying it. But low volume in itself shouldn’t prevent you from considering an ETF—some have the liquidity of a large-cap stock. ETF Liquidity Unlike stocks, ETFs have two levels of liquidity. …
Update In August 2016 UBS terminated VQTS. UBS wasn’t particularly patient with the fund, it had only been operational since December 4th, 2014, but it never gained much in the way of assets. As you can see below VQTS was a complex fund driven by factors that historically seemed to be good predictors of future market action, but like most funds that use backtested strategies …
It’s now clear that the VXUP/VXDN naysayers were right—the actual behavior of these funds is nowhere close to Accushares’ claim that “VXUP and VXDN are the first securities to offer direct “spot” exposure to the CBOE Volatility Index® (VIX).” Accushares has said nothing publicly about the poor behavior of the funds. Their only response has been to move up the “go live” date of their Corrective …
Eli Mintz, the publisher of vixcentral.com, has published an analysis that shows the arbitrage relationship between Accushares’ VXUP shares and VIX Futures. It shows that investors can use VXUP shares to lock in a low risk position for any VIX Future expiration month. What struck me about this analysis was the incentive to sell VIX futures that had a higher daily roll yield, regardless of …
