Leverage the Virtues of the VIX

JANUS HEDGED EQUITY ETFs

Client Conversations: Managing Volatility

Concerned About Managing Equity Drawdown Risk?

When investors have needed it most, the benefits of diversification have largely failed them. In severe market downturns, most asset classes have become considerably more correlated, creating large drawdowns for portfolios. Investors may be better prepared by finding investments that are less correlated to equities and offer potentially better downside protection.

A Strategy to Consider

An intriguing source of diversification has been the CBOE Volatility Index® (VIX®), which maintains a consistent inverse correlation to equities. Interestingly, the inverse relationship has actually magnified in periods of sharp downturns. While the VIX itself is not investable, investors can seek a similar negative correlation to equities by investing in VIX futures. A systematic strategy that can take advantage of the VIX’s inverse relationship to equities, but avoid the high cost of constantly maintaining a portfolio of futures could protect investors from drawdown risk, while sacrificing less of their total returns.

How Janus Can Help

Janus Hedged Equity ETFs offer a low-cost solution to access custom indices that are designed to optimally capture the VIX’s negative correlation to equities. They combine a broad exposure to the S&P 500® to capture equity markets’ upside with a volatility component that seeks to take advantage of the VIX’s negative correlation to equity markets during equity sell-offs.

Role in a Diversified Portfolio

FUND NAMECONSTRUCTIONPORTFOLIO POSITION
SPXH
Janus Velocity Volatility
Hedged Large Cap ETF
85% exposure to large-cap equities, 15% to a long short volatility strategy with a target net neutral volatility exposure.SPXH serves as core equity
SPXH serves as core equity
TRSK
Janus Velocity Tail Risk
Hedged Large Cap ETF
85% exposure to large-cap equities, 15% to a long short volatility strategy with a target long volatility exposure.TRSK serves as a liquid alternative
TRSK serves as a liquid alternative

*Ordinary brokerage commissions apply.

KEY FEATURES
  • Systematic Inversely Correlated Volatility Strategy

  • Low-Cost*, Efficient Equity Hedge

  • Potential Downside Protection