Barclays, a UK-based bank, today announced the launch of a new series of iPath Exchange Traded Notes (ETNs) designed for investors wishing to speculate on a fall in volatility.
The iPath Inverse S&P 500 VIX Short-Term Futures ETNs are linked to the inverse performance of the S&P 500 VIX Short-Term Futures Index Excess Return, and offer investors a ‘short’ view on volatility of US equity markets.
The returns on these new ETNs are calculated in a similar manner to those on the existing iPath Inverse S&P 500 VIX Short-Term Futures ETNs launched on July 16, 2010.
The two series of ETNs, both of which are listed on the NYSE Arca stock exchange, are similar in that they are linked to the inverse performance of the VIX Index.
However, they have, among other things, different inception dates, issue dates, final valuation dates and maturity dates, and the two series of ETNs are not fungible with one another.
The Index is designed to reflect the returns that are potentially available through an unleveraged investment in short-term futures contracts on the CBOE Volatility Index, known as VIX Futures.
VIX Futures reflect the implied volatility of the S&P 500 Index, which provides an indication of the pattern of stock price movement in the US equities market.
The new series of ETNs is an uncollateralized debt obligation of Barclays Bank PLC with a 10-year maturity.
While ETNs can offer many benefits, investors should be fully aware of all the risks before purchasing this type of security.