BlackRock recommends that institutional investors should consider volatility as an asset class and include a strategy using it in their portfolios - the...

BlackRock recommends that institutional investors should consider volatility as an asset class and include a strategy using it in their portfolios - the world's largest asset manager favours selling volatility via futures on the CBOE Volatility Index (VIX), puts on the S&P500 index and other securities, and variance swaps. These short volatility strategies are integrated into the equity allocations of investment portfolios. Most institutional investors set a static, strategic asset allocation grounded on fixed assumptions about volatility. They do not account for the risk that risk will change, writes Fred Dopfel and Sunder Ramkumar, two BlackRock strategists. (VIEW LINK)


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