IVOL - IVOL: Weighing The Value Drivers Leads To A Rating Downgrade
2024-05-13 08:18:09 ET
Summary
- The Quadratic Interest Rate Volatility and Inflation Hedge ETF holds a portfolio of TIPS bonds and curve steepeners.
- With the Fed likely on hold until inflation declines, I believe the yield curve may stay inverted and act as a headwind for IVOL.
- Until macro conditions change, the IVOL is unlikely to outperform.
A few weeks ago, I got an email invite from KFA Funds to attend a webinar hosted by Nancy Davis, the fund manager for the Quadratic Interest Rate Volatility and Inflation Hedge ETF ( IVOL ) (Figure 1).
Figure 1 - Recent marketing update from IVOL (ivoletf.com)
This invite reminded me of my horrific upgrade of the IVOL ETF a year ago. My buy thesis last April was straightforward: I believed the U.S. economy was headed for a recession, which would steepen the yield curve (as the Fed would likely cut interest rates to boost growth) and benefit IVOL's curve steepener bets....
IVOL: Weighing The Value Drivers Leads To A Rating Downgrade