Volatility is a natural part of investing, but it can be destructive to your portfolio. Although it is always wise to have strategies that can help reduce volatility, it may be especially important when changes in market or economic conditions seem inevitable. The right volatility strategy may, in fact, not only help reduce volatility, but also potentially enhance returns.
WisdomTree has a number of options to help investors reduce volatility—and potentially enhance returns— in any market conditions.
WisdomTree CBOE S&P 500 PutWrite Strategy Fund
The WisdomTree CBOE S&P 500 PutWrite Strategy Fund (PUTW) gives investors the option to reduce volatility, while potentially enhancing their returns in one simple investment that can complement their existing holdings.
Put writing has been used by professional investors for decades to increase the yield and lower the volatility of equity returns over various market cycles. PUTW invests in one- and three-month Treasury Bills, and sells or “writes” S&P 500 Index put options (enough to ensure full collateralization).
PUTW provides investors:
- Potential to earn additional income from premiums generated by selling put options
- Potential for enhanced risk-adjusted returns compared to S&P 500 Index or a similar covered call strategy
- Ability to benefit from implied volatility typically being higher than realized volatility
How to Manage Volatility
By Tripp Zimmerman
Part of being a successful investor is finding a way to balance and manage the amount of volatility you have in your portfolio.
WisdomTree Dynamic Long/Short U.S. Equity Fund
Alternative investments have many attractive benefits, but they traditionally come with substantial minimums, high investment costs, significant lock-up periods and sometimes unfavorable tax treatment—not to mention the fact that they tend to be completely opaque. And alternative investments are typically only available to accredited or institutional investors. The WisdomTree Dynamic Long/Short U.S. Equity Fund (DYLS) brings investors all the advantages of alternatives with all the benefits of ETFs.
DYLS offers investors:
- A strategy designed to profit from both rising and falling markets
- Diversification to traditional long only asset classes
- Access to alternative investments with no investment minimums, no sales loads, no lock up periods or redemption fees
- Full transparency of strategy and holdings with intra-day liquidity
- No K-1 filing—and all the other benefits of an ETF
WisdomTree CBOE Russell 2000 PutWrite Strategy Fund
A few years ago, we launched our first put option strategy that seeks to help investors increase the income generation—and lower the volatility—of investing in the S&P 500. Now the WisdomTree CBOE Russell 2000 PutWrite Strategy Fund (RPUT) gives small-cap investors the same big opportunity to access a sophisticated options strategy in an ETF.
- Put writing has been used by professional investors for decades to increase the yield and lower the volatility of equity returns over various market cycles
- “At-the-money” put writing strategies on the Russell 2000 Index have historically exhibited better risk-adjusted returns than the Russell 2000 Index
- Premium income can help mitigate the negative performance of investing in the Russell 2000 Index alone