Heightened Uncertainty May Not Dissipate until the Fed Rate Decision 16-17 September – Stay Hedged
Published 27 August 2015
- Sentiment in risk assets most exposed to China remain sour. At risk are export-biased equity markets, most notably in Europe.
- This is evident in spiking with implied volatility on VSTOXX which, at 35%, is at levels not seen since 2011 when the Spanish banking crisis amplified Greece’s sovereign default.
- Heightened volatility in risk assets may persist for much longer which presents an opportunity to stay hedged.
- Short ETPs may offer investors an efficient way to protect long positions in equities. The chart below shows how our short ETPs (full product list can be found here) have performed in the current macro backdrop. For example, as the EUROSTOXX 50 fell 9% over the past two weeks, our 3x short ETP tracking this index rose 27%.