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VIXH: Exposure to the S&P With a Hedge

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Stocks in this article: VIXVIXH

 

VXTH vs. S&P 500 TR

 

Prior to the credit crisis in late 2008 VXTH returns were basically in line with a total return that would be earned through owning a portfolio indexed to the S&P 500. Portfolio protection that may be gained through out of the money VIX Call options results in VXTH outperforming the S&P 500 portfolio through late 2008 and early 2009. Post credit crisis, VXTH has continued to perform in line with the S&P 500. It may be assumed that another market situation like the credit crisis will result in another period of VXTH performing better than an investment in the S&P 500.

So if you have an interest in long exposure to the S&P 500 along with a small hedge for tail risk, take a look at the VIXH exchange-traded fund. It may be a good way to gain long exposure with a kicker than helps you sleep at night.

Resources:

www.ftportfolios.com

www.cboe.com/vxth

www.cboe.com/learncenter

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At the time of publication, Russell Rhoads held no positions in the stocks or issues mentioned.


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