Black Swan Funds Have a Moment as Investors Hedge Market Doom
- Bank crisis fears drive renewed interest in hedging tail risks
- Investors take precaution against volatility surge months away
This article is for subscribers only.
Black Swan funds spend years waiting for markets to crash. Turns out, just a whiff of a crash is enough to juice performance.
These options-based strategies that benefit from volatility breakouts are having a great month while the S&P 500 is little changed in March, and widely owned bank shares have been battered, suggesting that a market-wide blowup would lead to big payouts. An actively managed exchange-traded tail-risk fund is up about 4% so far in March as banking turmoil deepens, on course for its second best month since March 2020 during the onset of the pandemic.