The Triple3 Volatility Advantage Fund has been added as an investment option on Macquarie Wrap, as advisers seek to diversify client portfolios and better manage volatility.
Triple 3 Partners was established in 2009 to provide volatility strategies to institutional clients, including alpha strategies, volatility overlay and volatility research.
The fund, which is distributed by Grant Samuel Funds Management (GSFM), aims to generate long-term absolute returns with its volatility-focused strategy to capture alpha from highly liquid exchange traded VIX options.
While volatility has traditionally been seen as a measure of risk, it is also an asset class in its own right, and one that offers an often-overlooked source of portfolio returns that are generally uncorrelated to equities.
“Volatility is a unique asset class that offers a largely untapped source of alpha for investors’ portfolios. With low correlation to other asset classes, it can be used to enhance returns and manage risk,” says Mr Damien McIntyre, director and head of distribution with GSFM.
“An investment in volatility can be accessed through the VIX with the use of options and volatility derivatives – which are a good natural diversifier,” Mr McIntyre says.
“Portfolio diversification is a particular issue for Australian investors – who have a definite home bias when it comes to local equity exposure and who, per capita, have the second highest equity exposure globally.
“The Triple3 Volatility Advantage Fund provides an alternative portfolio diversification option in this environment.”
VIX options generally, have been one of the fastest growing option markets in recent years and now rank up with the world’s most liquid – sometimes trading over 1 million options contracts per day.
The addition of the Triple 3 Volatility Fund to Macquarie Wrap follows the fund receiving a “Recommended” rating from research house Lonsec in August.