Surge in Wall Street Dispersion Trades Belies Crowding Concerns

After a year of Wall Street talking about how crowded the hugely popular dispersion trade is, it still appears to be working — and growing.

One sign of its enduring popularity is the surge in Quantitative Investment Strategy products offered by banks, which have found success bringing a systematic approach to the trade. Critics argue that while QIS makes volatility dispersion — where clients sell volatility on an index and buy it on the constituent names — available to a wider pool, investors can end up entering the trade at less attractive levels.