Fixed Income

Quadratic Capital Launches IVOL, The Quadratic Interest Rate Volatility and Inflation Hedge ETF

IVOL is the first-of-its-kind ETF that is long fixed income volatility and designed to hedge against and profit from a steepening yield curve

GREENWICH, Conn., May 14, 2019 /PRNewswire/ -- Quadratic Capital Management (Quadratic) today announced the launch of its first exchange-traded fund, the Quadratic Interest Rate Volatility and Inflation Hedge ETF (NYSE Arca: IVOL).  

Nancy Davis, Managing Partner & Chief Investment Officer, Quadratic Capital Management

IVOL is a first-of-its-kind fixed income ETF i which seeks to hedge against an increase in inflation, and to profit from an increase in interest rate volatility and a steepening of the yield curve, whether that occurs via rising long-term interest rates or falling short term interest rates. A steepening yield curve has historically been associated with large equity market declines.

Managed by Quadratic's Managing Partner and Chief Investment Officer Nancy Davis, IVOL is an actively managed ETF built to utilize Quadratic's in-depth knowledge of the OTC option markets.

"I could not be more excited to launch IVOL in the current market environment with volatility at generational low levels and the flat nature of the yield curve," said Davis, who was Head of Credit, Derivatives and OTC Trading for Goldman Sachs' proprietary trading group before founding Quadratic. "No other active or passive ETF provides its investors access to this market. This access is the key to IVOL's many applications."

IVOL may provide a potential hedge for numerous components of an investor's portfolio, including: 

  • Fixed Income: IVOL seeks to provide steady, inflation-protected income, a hedge against increasing inflation, and a potential asymmetric payoff when long-term interest rates become higher than short-term interest rates.
  • Equities: IVOL may act as a tail hedge, as historically the curve has steepened in large equity sell-offs.
  • Real Estate: IVOL may help hedge the risk of real estate asset depreciation brought on by rising long term interest rates.
  • Volatility: IVOL seeks to provide an attractive new means through which investors can add long volatility exposure without some of the structural drawbacks of current offerings in the market. 

"IVOL is the next big step in the democratization of the markets. IVOL provides access to the largest OTC markets that have previously been largely unavailable to most advisors and the vast majority of investors," Davis continued.

About Quadratic Capital

Quadratic Capital Management is an innovative asset management firm founded in 2013 by Nancy Davis. The firm has utilized its significant expertise in the options markets to construct IVOL.

i Based on Bloomberg reporting as of 5/8/2019, IVOL is the only US derivative based ETF to utilize OTC interest rate volatility options.