Nancy Davis, Founder of Quadratic Capital & Portfolio Manager for the BNDD and IVOL ETFs, KFA Funds joins Keith Black, Managing Director, RIA Channel to discuss how investors can enhance Agg-based fixed income portfolios.
The U.S. Bond Aggregate or the “Agg”, has some limitations when it comes to total bond market exposure. With roughly 30% of the Agg weighted towards mortgages and no exposure to inflation, it is inherently short fixed income volatility, explains Davis.
The Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL), launched by Davis just over four years ago, was the first ETF to deliver long volatility exposure in the bond markets. IVOL invests in asymmetric options to get exposure to inflation expectations beyond the CPI and can also profit from market stress. The Quadratic Deflation ETF (BNDD) launched in September 2021, seeks to benefit from lower growth, deflation, lower or negative long-term interest rates, and/or a reduction in the spread between shorter and longer term interest rates by investing in US Treasuries and options
To learn more:
The Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL) – KFA Funds
The Quadratic Deflation ETF (BNDD) – KFA Funds
Nancy Davis founded Quadratic Capital in 2013 and is the Portfolio Manager for The Quadratic Deflation ETF (BNDD) and The Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL). Nancy has been the recipient of numerous industry recognitions. Barron’s named her to their inaugural list of the “100 Most Influential Women in U.S. Finance.” Institutional Investor called her a “Rising Star of Hedge Funds.” The Hedge Fund Journal tapped her as one of “Tomorrow’s Titans.” Nancy began her career at Goldman Sachs where she spent nearly a decade, the last seven with the proprietary trading group where she rose to become the Head of Credit, Derivatives and OTC Trading. Prior to founding Quadratic Capital Management, she served as a portfolio manager at Highbridge Capital Management.