First Trust to Introduce VIX Tail ETF on Thursday

Illinois-based First Trust will introduce the First Trust CBOE S&P 500 VIX Tail Hedge Fund ETF

on Thursday. With an expense ratio of 0.6 percent per year, the new ETF will track the CBOE VIX Tail Hedge Index. VIXH will usually invest 90 percent of its assets in common stocks and call options included in the Index. The index is comprised of S&P 500 stocks and call options on the CBOE Market Volatility Index, or the so-called "VIX." A steep and sudden drop in equity market prices, such as a downward move of 20% or more in a month, is thought of as an unlikely or "tail" occurrence. The Index is designed to help cope with these extreme downward movements in the market by hedging its portfolio through purchasing call options on the VIX Index, or "tail hedging,"

It should also be noted, VIXH expects to lend securities representing up to 20 percent of the value of its total assets to broker-dealers, banks and other institutions to generate additional income, according to the filing. For more on ETFs, click

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