The ups and downs of ETF volatility

Volatility trading is still in its infancy, having only emerged as an investable asset class in 2004. Whether it qualifies as an asset class is still a topic of debate, but that has not stopped investors dabbling with the rapidly increasing range of exchange-traded products replicating volatility. However, with no physical underlying product and trading based on multiple layers of futures tracking the expectation of implied market fear, these instruments are not for the faint hearted. Indeed, volatility is a highly sophisticated and potentially costly portfolio tool. The vast majori...