Nancy Davis, Managing Partner & Chief Investment Officer at Quadratic Capital Management met with Julie Cooling, Founder & CEO, RIA Channel to discuss The Quadratic Interest Rate Volatility and Inflation Hedge ETF: IVOL.
As inflation soars and question marks surrounding interest rate movement continue, IVOL aims to deliver an especially timely solution to investors. The widely acclaimed inflation protection ETF, actively managed by Davis, has seen more than $2 billion in flows this year alone, and has gathered more than $3.22 billion in total assets under management.
Davis, who started her career at Goldman Sachs around the same time Treasury Inflation-Protected Securities or TIPS were first emerging, says the concept behind IVOL has been a career long passion.
TIPS, which make up roughly 90% of IVOL’s portfolio, solve for inflation by resetting on a semi-annual basis using the Consumer Pricing Index. What makes IVOL unique, is the addition of long interest rate options, which serve as an alternative measure of inflation not linked to the CPI.
Advisors are incorporating IVOL into their fixed income allocation as a way to diversify their exposure to the AGG as well as to neutralize the volatility that occurs in certain sectors of the fixed income market. Looking forward into 2022, Davis says with all of the unknowns and potential for stagflation risk, it’s a great time to be thinking about non-correlated assets and portfolio diversification.
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