Cassi Pittman Claytor
Assistant Professor of Sociology, Case Western Reserve University
Quadratic Capital Management
After winning a reputation for anticipating market chaos, Nancy Davis is working on solutions to the problems she foresees.
Davis predicted two different major bouts of market turmoil in 2018: “Volmageddon” early in the year, and the near-bear market at year’s end. As investors turned their attention to the inverted yield curve in 2019, she developed a fund intended to protect against inflation and volatility in interest rates.
Davis says that participants in interest-rate markets often figure out what’s going to happen before other groups of investors.
“Interest-rate markets are typically, if you had to grade them, the smartest markets,” she tells Business Insider. “They typically move before the credit markets, and definitely before the equity markets.”
She’s trying to use that intelligence to her and investors’ advantage now. Her firm’s new ETF, IVOL, is designed to profit when the yield curve steepens while protecting investors against the risk of rising inflation expectations and increasing interest-rate volatility. It was recently named the best new fixed-income exchange-traded fund of 2019 by ETF.com.
As of late July, the ETF was beating 90% of its peers with an 8.7% return in 2020.