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Rating:IndexIQ Unleashes an Agricultural ETF Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, March 21, 2011

IndexIQ Unleashes an Agricultural ETF

Reported by Neil Anderson, Managing Editor

IndexIQ is about to launch another new exchange-traded fund, its first focused on agriculture. Today the Rye Brook, New York-based alternatives manager confirmed that the IQ Global Agribusiness Small Cap ETF will begin trading tomorrow on the NYSE Arca, tracking the IQ Global Agribusiness Small Cap Index.

Adam Patti, CEO of IndexIQ, puts the launch in the context of volatile food prices. (According to IndexIQ, the 3.9 percent rise in food prices in February was the biggest monthly jump since November 1974.)

"Global supply shortages, changing dietary demands in emerging markets, growing populations and alternative energy production are among the many powerful factors driving global demand and skyrocketing prices for agribusiness products," Patti stated. "In our view, small capitalization companies are best positioned to translate this demand into significant growth."

The new ETF comes with an expense ratio of 75 basis points. Julie Abbett, senior vice president and head of portfolio management at IndexIQ, PMs the ETF. ALPS handles distribution.

Company Press Release

RYE BROOK, New York, (March 21, 2011) – IndexIQ, a leading developer of index- based liquid alternative investment solutions, is set to launch the IQ Global Agribusiness Small Cap ETF (NYSE Arca: CROP) on March 22, 2011, it was announced today.

CROP is the first Exchange-Traded Fund (ETF) designed to provide exposure to global small capitalization companies engaged in the fast-growing agribusiness sector, including agricultural machinery, livestock operations, crop production and farming, and biofuels and alternative energy. It seeks to track, before fees and expenses, the performance of the IQ Global Agribusiness Small Cap Index (Bloomberg Index Ticker: IQSMCROP).

The CROP launch comes only one month after food prices soared 3.9% in February, representing the biggest monthly increase since November 1974. Meat and dairy prices also rose in February, boosted by higher prices for corn and soybean that are used in animal feed. Economists widely expect food prices to continue rising for the remainder of 2011. Earlier this month, the United Nations Food and Agriculture Organization announced that global food prices have risen to their highest levels since 1990, when the agency first began tracking them.

“Global supply shortages, changing dietary demands in emerging markets, growing populations, and alternative energy production are among the many powerful factors driving global demand and skyrocketing prices for agribusiness products. We believe these trends are likely to persist for the foreseeable future,” said Adam Patti, chief executive officer at IndexIQ. “In our view, small capitalization companies are best positioned to translate this demand into significant growth. They are under-represented in other investment options, are typically faster growing and, in many cases, are undervalued relative to mega-cap multi-national companies, making them attractively positioned for growth and for acquisitions by the larger global players. We believe CROP is an efficient vehicle for gaining exposure to this dynamic sector and to these companies worldwide.”

The IQ Agribusiness Small Cap Index is float-adjusted and market capitalization- weighted. To be included in the index, companies must have a minimum average market capitalization of $150 million for the prior 90-day period. Stocks are required to have a minimum average daily trading volume of at least $1 million for the prior 90 days, and a minimum monthly volume of 250,000 shares for the prior six months. The Index’s components and their respective weights are rebalanced quarterly.

IndexIQ is the sponsor of a number of index-based alternative investment products designed to “democratize” the alternative investment landscape, including:

• IQ Alpha Hedge Strategy Fund (IQHIX – Institutional Share Class; IQHOX – Investor Share Class), the first open-end, no-load Hedge Fund Replication mutual fund;

• IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI), the first US-listed Hedge Fund Replication Exchange-Traded Fund;

• IQ Global Resources ETF (NYSE Arca: GRES), the first hedged Global Natural Resources ETF;

• IQ Merger Arbitrage ETF (NYSE Arca: MNA), the first Merger Arbitrage ETF;

• IQ Hedge Macro Tracker ETF (NYSE Arca: MCRO), the first Global Macro/Emerging Markets Hedge Fund Replication ETF;

• IQ Real Return ETF (NYSE Arca: CPI), the first US-listed “Real Return” ETF, which seeks to generate a real return above the rate of inflation as measured by changes in the Consumer Price Index;

• IQ Canada Small Cap ETF (NYSE Arca: CNDA), the first Canada small cap ETF;

• IQ Australia Small Cap ETF (NYSE Arca: KROO), the first Australia small cap ETF;

• IQ South Korea Small Cap ETF (NYSE Arca: SKOR), the first South Korea small cap ETF;

• IQ Taiwan Small Cap ETF (NYSE Arca: TWON), the first Taiwan small cap ETF. IndexIQ products are designed to be liquid, transparent, low cost, and accessible to a broad range of investors.*

About IndexIQ

Based in Rye Brook, New York, IndexIQ is a leading developer of index-based liquid alternative investment solutions that combine the benefits of traditional index investing with the risk-adjusted return potential sought by the best active managers. The company’s philosophy is to democratize investment management by making innovative alternative investment strategies available to investors in low cost, liquid and transparent products. IndexIQ strategies are marketed through the company’s proprietary investment products and select partnerships with leading global financial institutions. Additional information about the company and its products can be found at www.IndexIQ.com.

*Ordinary brokerage commissions apply. IndexIQ’s ETF holdings are available daily on IndexIQ’s website. ETFs are liquid in that they are exchange-traded.

The IQ Alpha Hedge Strategy Fund (IQ Fund), the IQ Hedge Multi-Strategy Tracker ETF (IQ Multi-Strategy ETF), and the IQ Macro Tracker ETF (IQ Macro ETF) are not hedge funds and do not invest in hedge funds. The IQ Alpha Hedge Strategy Fund is a registered open-end mutual fund that invests in exchange-traded funds (ETFs) and similar securities in an attempt to replicate the performance characteristics of certain hedge fund investing styles, but with less cost, more liquidity, and greater portfolio transparency than traditional hedge funds. There can be no assurance that the Funds’ investment strategies will be successful. The investment performance of the IQ Multi- Strategy ETF, the IQ Macro ETF and the IQ Real Return ETF (collectively, the IQ ETFs), because they are funds of funds, depends on the investment performance of the underlying ETFs in which they invest. There is no guarantee that the IQ ETFs themselves, or each of the underlying ETFs in the Funds’ portfolios, will perform exactly as its underlying index. The IQ ETFs are non-diversified and susceptible to greater losses if a single portfolio investment declines than would a diversified mutual fund. The IQ ETFs’ underlying ETFs invest in: foreign securities, which subject them to risk of loss not typically associated with domestic markets, such as currency fluctuations and political uncertainty; commodities markets, which subject them to greater volatility than investments in traditional securities, such as stocks and bonds; and fixed income securities, which subject them to credit risk, the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt, and interest rate risk, changes in the value of a fixed- income security resulting from changes in interest rates. Leverage, including borrowing, will cause some of the IQ ETF’s underlying ETFs to be more volatile than if the underlying ETFs had not been leveraged.

As CROP’s investments are concentrated in the Agribusiness sector, adverse weather conditions, economic forces and government policy and regulation could adversely affect CROP’s portfolio companies and, thus, CROP’s financial situation and performance. CROP is susceptible to foreign securities risk. Since CROP invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. CROP is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies and also are more vulnerable than those of large capitalization companies to adverse business and economic developments. Both CROP’s ability to track its Index and fund returns in general may be adversely impacted by changes in currency exchange rates. The ETF is new and has limited operating history. The fund is not suitable for all investors. Investors in the fund should be willing to accept a high degree of volatility in the price of its shares and the possibility of significant losses. An investment in the fund involves a substantial degree of risk and the fund does not represent a complete investment program.

Investors are reminded that all investing involves risk, including possible loss of principal. Consider the Funds’ investment objectives, risks, charges and expenses carefully before investing. A prospectus with this and other information about the Funds may be obtained by visiting www.indexiq.com or by calling (888) 934-0777. Read the prospectus carefully before investing.

The Funds are distributed by ALPS Distributors, Inc. (ALPS), which is not affiliated with IndexIQ. Adam Patti is a registered representative of ALPS. IDX000635.033112 

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