U.S. options-based funds grow in number despite volatility lull: study


(Reuters) – The number of U.S. options-based funds grew steadily over the last three years and the assets under management at these funds hit a record high in 2017, even as equity market volatility plummeted, according to a study released on Tuesday.

Traders work on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., March 2, 2018. REUTERS/Andrew Kelly

The number of U.S. Securities and Exchange Commission-registered option-based funds and exchange-traded products grew to 157 in 2017, up from 135 at the end of 2014, and the assets managed by these funds grew to a record-high of $54.15 billion, up from $49 billion, three years ago, the Cboe Exchange Inc-funded study, found. (bit.ly/1wbasBh)

U.S. stocks have only recently broken away from a prolonged stretch of muted gyrations that sent some measures of daily price swings to multi-decade lows. Some market participants believe a higher volatility environment typically leads to more adoption and use of options.

Option-based funds have risk and return more similar to a 60 percent stock, 40 percent bond portfolio rather than a long-only equity investment, the study found.

The study by Keith Black, managing director of curriculum and exams at Chartered Alternative Investment Analyst Association and Edward Szado, assistant professor of finance, Providence College, updates their 2014 paper and will be presented on Wednesday at a conference hosted by Cboe Global Markets Inc.

Reporting by Saqib Iqbal Ahmed; Editing by Lisa Shumaker

Source : Reuters