The Volatility Buffer Fund aims to help protect investors against the extremes of market movements and provide a buffer against the turmoil van Eyk predicts will regularly plague equity markets over the next several years as the global economy works off the excesses that helped precipitate the global financial crisis. 

The launch of the new fund continues van Eyk’s record of identifying and exploiting new investment trends ahead of its competitors. 

van Eyk chief executive Mark Thomas said that the recent market turmoil, amid renewed concerns about Greece and the stability of the Eurozone, was a reminder of the importance of investors having a buffer against a surge in market volatility. 

He said traditional methods of diversification had not worked well in times of market panic such as during the GFC. 

“At times like this, some assets traditionally used for diversification have proven to be highly correlated with equity markets instead of offering investors some protection,” Mr Thomas said.  

“This new fund treats volatility itself as an asset class and, by getting exposure to that asset class, has the potential to provide strong diversification benefits.” 

Mr Thomas said market volatility was the silent killer of investment returns because it reduced the power of compounding.

“The smoother the return stream from month to month and from year to year the higher the final return,” he said. 

The Volatility Buffer Fund is a key strategy for the van Eyk Blueprint Alternatives Fund, which has a proven track record of boosting investors’ risk-adjusted returns through exposure to alternative assets. These include real assets like commodities and gold and absolute return strategies, which include absolute equities, global macro and, now, volatility. 

Investors in the van Eyk Blueprint Balanced Fund may also receive these benefits through exposure to the Alternatives Fund. 

The Volatility Buffer Fund invests in specialist volatility strategies offered by Barclays and Triple Three Partners. 

The Triple Three strategy, for example, uses options over the CBOE Volatility Index (VIX Index) aiming to produce a consistent negative correlation to the performance of US shares. Historically, the Triple Three strategy has demonstrated a 74 per cent negative correlation to the S&P500 index in down markets. 

“Such a strategy aims to produce solid outperformance and absolute returns during falling markets, while slightly underperforming during bull markets,” Mr Thomas said.

“However, this is exactly what you want from an alternative asset class.” 

Investors can access the Blueprint Balanced and Alternative Funds on most major investment platforms. They can also invest directly in these Funds with a minimum investment of $50,000 and $25,000 respectively.

The van Eyk Blueprint Volatility Buffer Fund is open to wholesale investors with a minimum investment of $500,000. The Fund also offers daily pricing.

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