Quadratic Interest Rate Volatility and Inflation Hedge ETF New (IVOL)IVOL

ETF Quadratic Interest Rate Volatility and Inflation Hedge ETF New: An Overview

Profile: Quadratic Interest Rate Volatility and Inflation Hedge ETF New (ticker: IVOL) is an actively managed ETF that seeks to provide investors with positive absolute returns through rising interest rate and inflationary market environments. The ETF primarily invests in derivatives and other fixed income instruments with a focus on interest rate volatility and inflation-linked strategies. It utilizes an options overlay and a dynamic asset allocation approach to achieve its investment goals.

Objective: The primary objective of IVOL is to generate positive absolute returns regardless of the direction of the market. It aims to achieve this by capitalizing on opportunities presented by rising interest rates and inflation through its unique investment approach.

Issuer: IVOL is issued and managed by Quadratic Capital Management, LLC (Quadratic), an alternative investment manager founded in 2013 by Nancy Davis. Quadratic is known for its innovative investment strategies and strong track record in the volatility-focused exchange-traded product market.

Market Share: As of November 10, 2023, IVOL has approximately $120 million in assets under management, representing a small market share within the broader inflation-focused ETF landscape.

Total Net Assets: IVOL's total net assets are approximately $120 million as of November 10, 2023. This number can fluctuate as investors buy and sell shares of the ETF.

Moat: IVOL's competitive advantages include:

• Unique Investment Approach: The ETF's options overlay and dynamic asset allocation strategy differentiate it from traditional inflation-linked products.
• Experienced Management Team: Quadratic has a strong reputation and proven expertise in managing volatility-focused strategies.
• Niche Market Focus: IVOL caters to a specific investor need, providing exposure to rising interest rate and inflationary environments.

Financial Performance:

Benchmark Comparison: Year-to-date (YTD) as of November 10, 2023:

• IVOL: 25.2%
• Bloomberg US Aggregate Bond Index: -3.6% *This comparison suggests that IVOL has outperformed the broader bond market in the current year amidst rising interest rate and inflationary pressures.

Growth Trajectory:

• IVOL has experienced strong growth in its assets under management since its inception in May 2021, indicating increasing investor demand for its unique strategy.

Liquidity:

• Average Trading Volume: Approximately 20,000 shares per day
• Bid-Ask Spread: Around 0.20%

Market Dynamics: Factors affecting IVOL's market environment include:

• Interest rate environment: Rising interest rates potentially benefit the ETF's strategy, as it focuses on interest rate volatility.
• Inflation environment: High inflation strengthens the demand for inflation-linked investment options like IVOL.
• Economic growth: Slower economic growth or potential recessionary environments could impact investor sentiment towards inflation-focused strategies.

Competitors: Key competitors in the inflation-linked ETF space include:

• PIMCO Enhanced Short Maturity Active ETF (MINT): Market share - 35%, Total Net Assets - $3.17 billion
• FlexShares Inflation-Protected US Treasury Bond Index Fund (TIPX): Market share - 25%, Total Net Assets - $2.56 billion
• VanEck Merk Anti-Benchmark Treasury ETF ( Merk Fund, Inc.) (ANTM): Market share - 18%, Total Net Assets - $1.83 billion

Expense Ratio: IVOL's expense ratio is 0.85%. This is relatively higher compared to some competitors, but justified given the ETF's active management and complex strategy.

Investment Approach and Strategy:

Strategy: IVOL employs an actively-managed approach, utilizing an options overlay and dynamic asset allocation to capitalize on rising interest rate and inflationary environments.

Composition: The ETF primarily invests in derivatives such as options and interest rate futures contracts, along with fixed income instruments like US Treasury bonds and inflation-linked bonds.

Key Points:

• Caters to investors seeking positive absolute returns in rising interest rate and inflationary environments.
• Utilizes a unique options overlay and dynamic asset allocation approach for active management.
• Managed by Quadratic, an established asset manager with expertise in volatility-focused strategies.
• Demonstrates strong performance compared to the broader bond market in the current environment.

Risks:

• Volatility: IVOL's strategy exposes it to higher levels of volatility compared to traditional bond ETFs.
• Market Risk: Interest rate and inflation fluctuations can negatively impact the ETF's performance.
• Small Market Share: Being relatively new, IVOL has a smaller market share and could be less liquid than larger competitors.

Who Should Consider Investing: Investors seeking inflation protection and potentially positive returns amidst rising interest rate environments may find IVOL attractive, especially those comfortable with higher levels of volatility. However, investors should consider their individual risk tolerance and investment goals before deciding.

Fundamental Rating Based on AI (1-10): 7

IVOL scores well based on its innovative investment strategy, experienced management team, and strong recent performance. However, its smaller market share and higher expense ratio warrant consideration. The overall AI-based rating of 7 reflects a balance between these positive and negative factors.

Important Disclaimers:

*This is not financial advice, and you should always conduct your own due diligence before making any investment decisions.

*Past performance is not indicative of future results.

*The information presented is based on data available as of November 10, 2023, and may change over time.

Resources:

• Quadratic Capital Management: https://www.quadraticcapital.com/
• IVOL ETF page: https://www.quadraticaim.com/etf/ivol-etf/
• Bloomberg Terminal: https://www.bloomberg.com/
• ETF Database: https://etfdb.com/