Tail Risk Fund for Those Expecting a Crash

By on May 24, 2013

bear marketMaureen Farrell, of CNNMoney.com, writes about a fund that will skyrocket if the stock market collapses. Known as a “Tail Risk Fund,” it purchases cheap out of the money insurance that will provide exponential returns if equity indexes drop by 20% or more.

Universa Investments, whose adviser is Nassim Taleb, author of The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: “On Robustness and Fragility”, is drawing money at a record rate so far this year.


In 2008, when the S&P 500 dropped nearly 40%, Universa generated returns of more than 115% for investors, according to a source familiar with the fund’s performance.

Universa expects returns of at least 60% when the market is down 20%.

Source: Yahoo Finance


  1. Captain Midnight

    May 24, 2013 at 1:40 pm

    What is the expenses ratio? Probably could do this cheaper myself.

    • Barron Maestro

      May 25, 2013 at 7:46 am

      From what I can tell Universa offers an ETF trading on the Toronto exchange called Horizons Universa US Black Swan ETF (symbol HUS.U). It has an expense ratio of 0.95%. A review of the ETF fact sheet reveals it holds the vast majority of its assets (99+%) in an S&P 500 index ETF with a very small amount of put options on the same index. The options appear to be way out of the money.

      An investor could do the same thing for a fraction of the cost, especially with a large portfolio. This ETF might be a good option for an investor lacking financial resources and/or sophistication.

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