Henderson Global Investors is likely to incorporate VIX futures into several of its equity funds once liquidity in the contracts reach high enough levels. VIX is a measure of the implied volatility of the Standard & Poor's 500 and the Chicago Mercantile Exchange is planning to introduce futures on the index in the second quarter.
Mike Chadney , head of structured products and derivatives at Henderson in London, said the contracts will be useful because they are diverse and negatively correlated to the equity market, which means they should be able to boost returns and reduce risk. For example, if the equity market plummets implied volatility often rises so if you owned futures your loss would be cushioned, explained Chadney.
