Among the search for non-correlated strategies in the current risk-laden environment, The Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL) has stood out from its fixed income ETF peers, gathering nearly half a billion dollars in assets under management and winning the 2019 ETF.com award for Best New U.S. Fixed Income ETF. As the first fund to place a bond convexity strategy within an ETF wrapper, IVOL seeks to hedge relative interest rate movements while providing the potential for enhanced, inflation-protected income. Quadratic Capital founder and Managing Partner Nancy Davis joins Let's Talk ETFs to make sense of the current interest rate environment and explain why her firm's flagship fund belongs in intelligently constructed portfolios.
Show notes
4:30 - Why leave the comfort of the "big Wall Street firms" to launch your own firm and ETF?
6:45 - Is the strategy underlying IVOL similar to what you are doing for private clients at Quadratic?
8:30 - Nancy's broad outlook for fixed income in the present environment
12:00 - When does the risk of inflation become real and how long will it take to get there?
14:00 - A way to play a widening yield curve?
17:15 - Breaking down IVOL's risk profile
21:30 - Understanding IVOL's component parts: Long options tied to the shape of the U.S. interest rate swap curve
24:00 - Is there a benchmark with which to measure the fund's performance?
25:30 - IVOL: As non-correlated to common asset classes as an ETF strategy gets
32:30 - Understanding IVOL's component parts: Why go with The Schwab U.S. TIPS ETF (SCHP) for the TIPS component?
34:45 - The current outlook: Between the pandemic and the U.S. election, how much rate volatility should investors be pricing in for the rest of the year?
40:00 - Next steps: Nancy's future plans in the ETF space
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