Room for skew

There has been a strong push to allow investors to take exposure to volatility, correlation and dividends over the past few years. But some banks have been thinking about how they can monetise skew in a single packaged product. By John Ferry

Equity investors have long been able to tap directly into volatility, correlation and dividends. Most dealers offer markets in these so-called hidden assets, with variance swaps by far the most liquid, attracting attention from hedge funds, asset managers and pension funds. However, taking exposure to skew - often described as the Holy Grail of hidden assets - has proved more elusive.

There would appear to be plenty of opportunities for those able to tap into skew: the curve has been