He's referring to the more complicated derivative products that allowed those funds to buy risk in the form of betting on low future volatility. Since volatility has recently spiked, those types of products have lost the majority of their value.

He's using "product" to contrast derivatives and more exotic exchange traded instruments (that are often developed like products, i.e. with marketing and salespeople) with more traditional instruments like stocks and bonds.

The broader point he's making is that people bought complicated, high-risk instruments that they may not have understood (or at least treated as something other than what they were, in this cases, vehicles to bet against macro volatility) and lost money on them, and then blamed the losses on something other than the actual downside of that risk.