Fed: LETFs Contribute To Stock Volatility - Hedge Fund Alpha (formerly ValueWalk Premium)
Low-Volatility

Fed: LETFs Contribute To Stock Volatility

LETFs (leveraged exchange traded funds) may contribute to stock volatility in the same way that portfolio insurance contributed to the 1987 stock market crash, according to recent research done by Tugkan Tuzun at the U.S. Federal Reserve. He argues that the same positive feedback loops, especially during the final hour of trading, exacerbate high volatility, though it may not have a significant effect on the market during times of relative stability. Before the stock market crash of October 19, 1987 asset managers often used portfolio insurance strategies that involved buying stocks when the market moved up and selling when the...

This content is exclusively for paying members of Hedge Fund Alpha

Gain Exclusive Access to the Insider Strategies and Letters to Shareholders from the Top Hedge Funds and Maximize Your Portfolio Growth with Hedge Fund Alpha

Get Started Now with a FREE 7-Day Trial🔻

If you are a current Hedge Fund Alpha member and are having an account error please clear cache and cookies. If that does not work, email [email protected] or click Chat.


X
Saved Articles
X
TextTExtLInkTextTExtLInk

Watch a FREE Behind the Scenes Training on the 3 Secrets to Finding Small Cap Stock Opportunities with Massive Growth Potential in 2024.

Click here to get the training