SVOL - SVOL: Still Relevant In A Low Volatility Environment
2024-03-22 02:34:27 ET
Summary
- Simplify Volatility Premium ETF is a popular income-generating ETF with an yield of 16% by betting against VIX.
- Many people are concerned that it may not be relevant to "short" VIX when VIX is so low as it is.
- The fund continues to outperform the overall market in total returns as well as risk-adjusted returns.
- Some distributions come from ROC but this is not something to worry about unless you see NAV decay alongside with it.
Introduction
Simplify Volatility Premium ETF ( SVOL ) is a highly popular income generating ETF with a yield of 16% which I covered a few times in the past, most recently six months ago in an article titled Here Is What Happens To SVOL In Different Scenarios . Things have been interesting since then because volatility levels in the market have been super low barely holding at the low end of the double digit territory. This led many people to think that SVOL might not be relevant anymore because volatility rates are so low that they can't get any lower so there must be no point in doing what SVOL does which is shorting VIX....
SVOL: Still Relevant In A Low Volatility Environment