Concerns around the potential impact that short VIX exchange traded products (ETPs) positions could have on inverse and leveraged product flows have increased as volatility (VIX futures) continued to rise resulting on a collapse of short volatility trades which threatened to wreak havoc in the market .

Rocky Fishman, a derivatives analyst at Goldman Sachs, wrote in mid-January that 'the potential for short and leveraged ETPs to start buying VIX futures quickly on a sudden volatility spike has grown' making short-date VIX-based hedges timely. Fishman's concerns materialised yesterday as one-day, end-of-day volatility spike triggered an the SP500 index selloff near the end of the trading day which forced issuers to replace positions quickly to avoid being exposed to unhedged overnight risk or excessive tracking error.

Earlier today, Horizons ETFs Management Canada announced a trading halt on the units of its Horizons BetaPro S&P 500 VIX Short-Term Futures Daily Inverse ETF, which trades on the Toronto Stock Exchange. The Horizons ETF is just the latest of a series of inverse trackers linked to the volatility index and joined a growing list of casualties hit by the sudden volatility spike.

The asset manager's decision to halt the ETF followed its assessment of the extreme volatility in VIX- futures market that occurred in after-hours market trading yesterday. 'The unexpected level of volatility has impaired the trading of the underlying derivatives used by many VIX-related exchange traded products that seek to provide inverse exposure to the S&P 500 VIX Short-Term Futures,' it said in a statement published today (February 7). Horizon has also temporarily suspended redemptions and new subscriptions until further notice.

Horizon's decision shows the dimension of the disruption caused by the sudden increase in volatility which has forced providers to pull out any short/inverse strategies tracking the VIX index. According to Bloomberg, Barclays stopped the trading of a number of products of its iPath range including the iPath S&P 500 VIX Short-Term Futures ETN; iPath Inverse S&P 500 VIX Short-Term Futures; iPath Inverse S&P 500 VIX Short-Term Futures; iPath Series B S&P 500 VIX Short-Term Futures ETN; and iPath Series B S&P 500 VIX Mid-Term Futures ETN.

Credit Suisse has also halted the trading of seven tracker notes including the VelocityShares VIX Tail Risk ETN; VelocityShares 1x Long VSTOXX Futures ETN; VelocityShares 1x Daily Inverse VSTOXX Futures ETN; VelocityShares Daily Inverse VIX Short-Term ETN; VelocityShares Daily Inverse VIX Medium-Term ETN; VelocityShares INV VIX Short-Term Futures ETN; and VelocityShares VIX Short Volatility Hedged ETN.

In addition, UBS stopped the trading of its ETracs Monthly Pay 2xLeveraged S&P Dividend ETN with three other ETFs including the REX VolMAXX Short Volatility ETF, ProShares Short VIX Short-Term Futures ETF and ProShares VIX Short-Term Futures ETF, also biting the dust.

Solactive licenses US Internet Index
Index provider Solactive has licensed the Solactive US Internet Index to IBI Investment House to be used as the underlying index for the firm's newly-launched IBI (4D) SAL Solactive US Internet ETF, which is trading on the Tel Aviv Stock Exchange. The index tracks the performance of US companies operating in the Internet sector with a minimum market capitalization of US$500m. These companies provide Internet-related goods or services, and are involved in activities such as network communications, Internet access, Internet infrastructure, Internet software, e-commerce, website design, web hosting, and cloud computing.

Starting from the Solactive US Broad Market Index, the index selects companies that generate most of their revenues from the Internet. Examples of constituents include Twitter, Ebay, Paypal, Morningstar, and Yelp.

Metaurus Advisors rollsout US equity dividend ETFs

Metaurus Advisors, a US financial technology firm, has launched two new tracker funds aimed at investors seeking either dividend cash flow or equity market growth, each with a passive, index-based strategy.

Metaurus Advisors' US Equity Cumulative Dividends Fund - Series 2027 provides income-oriented investors 'a low cost way to participate solely in the actual ordinary dividends of the companies in the S&P 500 Index without exposure to the price movements in the constituent index stocks'. The fund intends to pay monthly dividends through 2027 based on the actual ordinary dividends paid by companies in the index during the previous month. IDIV intends to employ a passive strategy designed to track the Solactive US Cumulative Dividends Index - Series 2027. This index is designed to track the current value of ordinary dividends expected to be paid on the S&P 500 Index until December 2027.

Metaurus Advisors' US Equity Ex-Dividend Fund - Series 2027 provides long-term growth-oriented investors a way to participate in the growth potential of the companies in the S&P 500 Index at a reduced purchase price. This ETF does not use leverage and is designed to provide investors with full equity price exposure by being compensated up front at time of investment for the value of 10 years of projected dividends. Both funds are designed to liquidate in December 2027. This ETF intends to employ a passive strategy designed to track the Solactive US Ex Dividends Index - Series 2027. This index is designed to track the value of shares in the index less the current value of ordinary dividends expected to be paid on the S&P 500 Index stocks until December 2027. IDIV intends to pay cash distributions monthly.

Active ETPs listed globally grow by 57.3% in 2017

Assets invested in active ETFs/ETPs listed globally grew by a record US$27.40bn during 2017, over double the previous record of US$11.20bn set in 2016, according to ETFGI. The increase of 57.3%, from US$47.84bn at the end of 2016, also represents the greatest growth in assets since 2009 when markets recovered following the 2008 financial crisis.

December 2017 marked the 36th consecutive month of net inflows into active ETFs/ETPs listed globally, with US$1.21bn gathered during the month. During 2017 active ETFs/ETPs listed globally saw net inflows of US$24.92bn; 154.33% more than net inflows for 2016. The majority of these flows can be attributed to the top 20 active ETFs by net new assets, which collectively gathered US$14.54bn during 2017. The Pimco Enhanced Short Maturity Strategy Fund (MINT US) on its own accounted for net inflows of US$2.40bn.

Similarly, the top 5 Active ETPs by net new assets collectively gathered US$54.07m year-to-date during 2017. Equity ETFs/ETPs listed globally saw net inflows of US$876m in December, growing net inflows for 2017 to US$7.20bn. Fixed Income ETFs and ETPs gathered net inflows of US$126m in December, bringing net inflows for 2017 to US$16.43bn.

Lyxor adds green bond (DR) Ucits tracker ETF

Lyxor has launched a new green bond exchange traded fund (ETF) which is tradable on Xetra and Börse Frankfurt. The Lyxor Green Bond (DR) UCITS ETF enables investors to participate in the performance of green bonds issued by investment-grade companies and denominated in euros or US dollars.

The index which was launched in February 2017 as a first-of-its-kind reference for the performance of investment grade green bonds denominated in euros or US dollars, harnesses the global green bonds data capabilities of Climate Bonds Initiative, an investor-focused not-for-profit working to mobilize bond markets for climate change solutions. The index also minimises the exchange rate risk between the US dollar and the euros.

The index universe comprises all USD and EUR denominated investment grade bonds that have been defined as green bonds by the Climate Bond Initiative. Floating rate notes, inflation linked bonds, convertible bonds and municipal bonds are excluded from potential selection. The Lyxor Green Bond (DR) UCITS ETF is hedged monthly and has ongoing charges of 0.30%.

The product adds to the pool of ETFs available on Deutsche Börse's XTF segment currently comprises a total of 1,212 tracker funds.