The Triple3 Volatility Advantage Fund, which is distributed in the Australian market by Grant Samuel Funds Management, aims to generate long-term absolute returns with its volatility-focused strategy to capture alpha from highly liquid exchange-traded VIX options, which are negatively correlated to equities.

“The “Recommended” rating indicates that Lonsec has strong conviction the financial product can generate risk-adjusted returns in line with relevant objectives and that the financial product is considered an appropriate entry point to this asset class or strategy.

“The Fund is relatively simple in design and has intuitive appeal,” Lonsec says.

“It invests in exchange traded VIX options which are liquid and regularly priced. The Fund is heavily concentrated in just a few securities; VIX options, cash and cash-like securities, however given the nature of the strategy, Lonsec considers this to be an appropriate approach.

“From a broader portfolio construction perspective, the Fund is an appealing diversifier from traditional equity market risk.

“The Fund is expected to be causally negatively correlated to US equities when needed most (in times of falling equity markets),” Lonsec says.

Damien McIntyre, director and head of distribution with Grant Samuel Funds Management, says the rating is timely, and will increase the appeal of the Fund to the retail market.

“Investing in volatility is at the forefront of investor activity in the United States, and this is increasingly being reflected in the investment range available there.

“There are 22 VIX based exchange traded products that operate in the US market.  But until the launch of the Triple 3 Volatility Advantage Fund there was not one VIX based product in the Australian market.

“Investing in volatility provides the ability to diversify in ways that asset classes can’t, and Australian investors can invest in volatility through this Fund,” Mr McIntyre says

The Fund also has a AA rating from van Eyk.

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