Monday, October 07, 2013
A Hedge-like ETF Hits $500MM
Reported by Tommy Fernandez
The IQ Hedge Multi-Strategy Tracker ETF
(QAI), sponsored by IndexIQ
, has reached a major milestone.
The product, purported by IndexIQ to be the first hedge fund style ETF and the industry's largest alternative exchange-traded fund, has reached $500 million in assets.
“We are seeing tremendous interest in QAI from the financial advisor community, who increasingly are using the fund as their core hedge fund portfolio holding, while QAI also is being added to ETF model portfolios throughout the industry,” stated Adam Patti, IndexIQ’s chief executive officer. “In many cases, QAI is used to provide the liquid alternatives allocation in these models, while in other cases, it is viewed as a bond substitute. Using QAI as a fixed income alternative has resonated strongly with investors since QAI is designed to seek strong performance in rising rate environments with a similar volatility profile to the aggregate bond market, while providing a competitive yield. Since IndexIQ exceeded $1 billion in assets under management, and as the firm’s product track-records have surpassed 4 and 5 years, IndexIQ has experienced a significant increase in asset flows across our lineup, particularly from the institutional community.”
Here is the press release:
FIRST HEDGE FUND STYLE ETF (QAI) TOPS $500 MILLION IN ASSETS;?IQ HEDGE MULTI-STRATEGY TRACKER ETF IS INDUSTRY’S LARGEST ALTERNATIVE ETF
Fund leads next-generation alternative funds in asset gathering;?Growth comes with increasing adoption as a core portfolio holding and as advisor firms add fund to model portfolios
RYE BROOK, New York, (October 7, 2013) – The IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI), the first hedge fund style ETF and the industry’s largest alternative exchange-traded fund, topped $500 million in assets, it was announced today by IndexIQ, the fund’s sponsor, a leading developer of index-based alternative investment solutions. This represents a growth rate in excess of 50 percent year to date.
“We are seeing tremendous interest in QAI from the financial advisor community, who increasingly are using the fund as their core hedge fund portfolio holding, while QAI also is being added to ETF model portfolios throughout the industry,” said Adam Patti, IndexIQ’s chief executive officer. “In many cases, QAI is used to provide the liquid alternatives allocation in these models, while in other cases, it is viewed as a bond substitute. Using QAI as a fixed income alternative has resonated strongly with investors since QAI is designed to seek strong performance in rising rate environments with a similar volatility profile to the aggregate bond market, while providing a competitive yield. Since IndexIQ exceeded $1 billion in assets under management, and as the firm’s product track-records have surpassed 4 and 5 years, IndexIQ has experienced a significant increase in asset flows across our lineup, particularly from the institutional community.”
The liquid alternative category has grown substantially in recent years with firms such as SEI and McKinsey & Company predicting that billions of dollars in new assets will flow into these funds over the next decade. With its broad-based family of liquid alternative ETFs, IndexIQ believes it is very well positioned to take advantage of this trend, according to Patti.
“There is no question that investors have been confronted with a series of extraordinary challenges over the last few years, ranging from the financial crisis to quantitative easing and the potential impact of Fed tapering,” said Patti. “We believe our funds help solve a real problem faced by many investors who want exposure to the markets but are concerned about volatility and downside risk.”
QAI seeks to track, before fees and expenses, the performance of the IQ Hedge Multi-Strategy Index. The Index attempts to replicate the risk-adjusted return characteristics of hedge funds using various hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets. At launch in March 2009, QAI introduced an entirely new class of liquid alternative Exchange-Traded Funds, providing investors and their advisors with access to a hedge fund-like strategy in an ETF, with all the advantages that fund structure entails –low costs, high liquidity, and full transparency.
IndexIQ sponsors a family of liquid alternative ETFs, including QAI; IQ Hedge Macro Tracker ETF (NYSE Arca: MCRO), the first Global Macro/Emerging Markets hedge fund replication ETF; IQ Hedge Market Neutral Tracker (NYSE Arca: QMN), designed to provide Market Neutral hedge fund exposure; IQ Merger Arbitrage ETF (NYSE Arca: MNA), the first merger arbitrage ETF; and IQ Global Resources ETF (NYSE Arca: GRES), the first hedged global natural resources ETF.
The IQ Hedge Indexes are used as the basis for investment products worldwide, and as benchmarks for advisors to determine how well actively managed hedge funds and alternative mutual funds are performing. The indexes underlie a variety of investment products in addition to ETFs, including mutual funds, separately managed accounts, model portfolios, and institutional accounts.
In addition to the alternative products named above, other IndexIQ funds include:
• 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 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 US Real Estate Small Cap ETF (NYSE Arca: ROOF), the first US Real Estate Small Cap ETF;
• IQ Global Agribusiness Small Cap ETF (NYSE Arca: CROP), the first agribusiness small cap ETF;
• IQ Global Oil Small Cap ETF (NYSE Arca: IOIL), the first global oil small cap ETF;
• IQ Canada Small Cap ETF (NYSE Arca: CNDA), the first Canada small cap ETF; and,
• IQ Australia Small Cap ETF (NYSE Arca: KROO), the first Australia small cap ETF.
?IndexIQ is a leading issuer of index-based liquid alternative solutions focused on absolute return, real asset and international strategies. IndexIQ solutions are offered as ETFs, Mutual Funds, Separate Accounts and Model Portfolios. IndexIQ’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.
*IndexIQ’s ETF holdings are available daily on IndexIQ’s website. Brokerage commissions apply to ETFs. ETFs are liquid in that they are exchange-traded.
Index performance does not reflect charges and expenses associated with the Funds or brokerage commissions associated with buying and selling ETF shares. One cannot invest directly in an index.
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.
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.
IndexIQ ETFs and mutual funds are distributed by ALPS Distributors, Inc., which is not affiliated with IndexIQ.
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