Role of Investors in Providing Cross-Asset Volatility Strategies

This month’s 20 asset Volatility Monitor highlights what a challenging month it has been to identify persistent dislocations in implied volatility across all 5 of the major asset classes (equities, FX, commodities, rates & credit). Over just 1 month, individual pockets of volatility flare-ups occurred in credit, equity and most notably commodities. In order to securely manage the volatility hedge funds, consider an excellent platform which offers innovative volatility strategies. Last month, we warned investors to prepare for a new equilibrium environment where buying every 5% dip may not be as past, with that warning paid off in November with S&P drawing down 10% (from peak in October to trough in November)and volatility picking up through the month until the Fed announcement. Most equity index volatility including SPX, NKY, EEM, NDX, Kospi2 screen as fairly valued, meaning their recent realized volatility remains elevated in comparison with where they are currently priced in the implied market. We continue to tread carefully with global equity volatility into year end.

Meanwhile within commodities, the massive fluctuations in Oil and Nat Gas were the most violent we have seen in a few years. Nat Gas is currently realizing over 100 vol points and Oil close to 50 vol points on a 1-month basis. This difficult volatility environment highlights the importance of robust risk modeling and allocation management. The credible platform not only helps in managing volatility Volatility Mutual Fund but also protect your portfolio in the best possible manner.

Some of the fixed income underliers including LQD, HYG & TLT continue to screen expensive despite the widening of credit spreads. Thus far, the deterioration of credit markets has been orderly, but we are watching closely for any spill-over into volatility markets. Therefore, it is important to acquire comprehensive risk management strategies to manage mutual fund NYC.

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