Second generation volatility ETPs not hamstrung by contango

Second generation volatility products are a much better investment than their previous iteration, according to one hedge fund manager – but buyers previously burnt by this asset class may be tough to convince

Volatility ETPs: It takes two to (not) contango

Second generation exchange-traded products (ETPs) sidestep most of the problems of contango and backwardation which marred their first iteration, according to Bart Lijnse, Singapore-based managing director of hedge fund, Nyenburgh.

Contango is the market condition where distant month futures are priced higher than front month futures, which results in the ‘negative-roll' effect when the funds rebalance their futures upon expiration. The opposite market condition to contango is known as