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Source Launches Another Volatility Product

Mark Shapland

12 August 2014

London headquartered exchange traded product provider Source has launched its latest product alongside JP Morgan.

Named the Source JP Morgan Macro Hedge Dual Vega Target 4 per cent TR UCITS ETF, it is designed to provide exposure to volatility and is the third ETF in the JP Morgan Macro Hedge series.

“Volatility is an attractive hedge in times of macro-economic stress - it tends to spike when equities and other risky assets crash. However, volatility exposure can be costly over the long term. JP Morgan’s Macro Hedge indices aim to capture spikes in volatility and, when markets are calmer, to generate a positive return,” Source said in a statement.

The product is exposed to US equity volatility, switching from long to long/short exposure depending on market conditions, Source adds.

“Investors need a hedging instrument that will capture the big spikes in volatility but doesn’t see large gains and losses when market conditions are more normal. By reducing exposure in these circumstances, we aim to generate more stable performance,” said Rui Fernandes, head of equity and funds derivatives structuring at JP Morgan. 

The product will trade on the London Stock Exchange. It is registered for sale in Austria, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway Switzerland, Sweden and the UK.