The Daily Brief
A Resurgence in Volatility ETPs

A Resurgence in Volatility ETPs

What goes up... | Copyright Daniel Berehulak, Getty Images

As traders look to profit from the increased turbulence in the markets this year, there has been a resurgence in volatility exchange traded products. According to a new report from TABB Group, traders in the five largest volatility ETPs exchanged 25.2 billion shares in the first half of 2016, likely exceeding last year’s volume by 86 percent. That’s on pace to reach a notional value in these products of $946 billion in 2016, 26 percent higher than 2015. While there has also been an increase in VIX futures and options, TABB points out that volatility ETPs allow retail traders to access long-volatility, short-volatility and market-hedging strategies. “The booming popularity of volatility ETPs presents a wealth of opportunities for market participants,” said Callie Bost, author of the report. “These products will continue to be in the spotlight as market turbulence picks up on the heels of global economic turmoil and future global monetary policy decisions.”

Strategic Acquirers Drive Over a Third of M&A Activity

More than just acquiring books of business.

According to a Fidelity report on wealth management mergers and acquisitions, strategic acquirers drove 39 percent of M&A activity in the first half of 2016. Fidelity defines these strategic acquirers as “firms that take a financial interest in an advisory firm to help them grow and perform more effectively through strategic guidance and operating support.” Though there are several strategies these firms take, the majority have evolved their approach from just acquiring the cash flows of books of business to a more deliberate focus on building a sustainable and better-integrated business. “The biggest takeaway here for RIAs is that M&A strategies are becoming an increasingly important consideration for the future of their businesses,” said David Canter, the executive vice president of practice management and consulting at Fidelity Clearing & Custody Solutions. “In order to realize their full potential value, advisors need to think about the firm they want to partner with and whether their businesses are in a good position for a successful acquisition.”

Anxiety Leads to Financially Confident Millennials

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While they may be concerned about retirement security and daily expenses, millennials appear optimistic about the future of the economy and their own financial outlook, according to the 2016 Northwestern Mutual's Planning & Progress Study. Millennials are least likely to anticipate another financial crisis than any other generation, while 40 percent believe the nation's economy will heat up in 2016, compared to fewer than a third of the rest of the population who feel the same. At least one worry of this younger generation, though, is retirement planning. More than double the general population34 percent of millennialsthink Social Security will be unavailable when they retire. And the financial anxiety doesn't stop there. Half of this young generation lists affording day-to-day expenses as their top financial concern. Interestingly, though, the survey founddespite some serious financial concerns86 percent of millennials feel confident they will eventually meet their financial goals. This could be due to meticulous financial planning. More than half of millennials consider themselves highly disciplined or disciplined financial planners.

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