WisdomTree has launched the WisdomTree Cboe S&P 500 PutWrite Ucits ETF (PUTW), on the London Stock Exchange. PUTW offers investors the potential for mitigating volatility and delivering higher risk-adjusted returns compared to the S&P 500.
The S&P 500 (SPX) is one of the most widely followed indexes for US stock market exposure and when volatility rises, many investors search for ways to reduce their risk while maintaining—or enhancing—their returns.
Rafi Aviav, WisdomTree head of Product Development in Europe, said, “As investors search for investment opportunities that lie outside traditional asset classes and beyond common risk factors, PUTW offers a unique source of return by delivering an institutional options strategy in a widely accessible Ucits ETF wrapper.”
“PUTW employs an options strategy which includes, on a monthly basis, selling (or “writing”) at-the-money S&P 500 put options and investing the proceeds from that sale in US treasury bills. For assuming the risk of market losses through the put positions, the ETF earns a ‘volatility risk premium’ which can diversify investors’ sources of return and reduce the volatility of equity returns in portfolios,” he said.
WisdomTree has worked with Cboe Global Markets on PUTW and the ETF aims to track the Cboe S&P 500 PutWrite index, which has a live track record dating back to 2007.