IndexIQ Launches Hedge Fund Strategy ETF
March 26, 2009
IndexIQ, a Rye, NY-based index provider, has just introduced the IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI) which is benchmarked to the IQ Hedge Multi-Strategy Index.
Although QAI does not own or invest directly in hedge funds, it uses hedge fund like investment strategies that include long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, and emerging markets. The goal of the underlying index is to capture the risk-adjusted return characteristics of the collective hedge fund universe using multiple hedge fund investment styles.
"The IQ Hedge Multi-Strategy Tracker ETF brings together two of the most significant developments in the investment business over the last several years - the growing importance of alternative investments and the convenience, low cost, liquidity and transparency of ETFs," said Adam Patti, chief executive officer at IndexIQ.
QAI executes its hedge fund styled strategies using ETFs. The fund's top three ETF holdings are the iShares Barclays Aggregate Bond Index Fund (NYSEArca: AGG), the iShares Barclays 1-3 Year Treasury Bond Index Fund (NYSEArca: SHY), and the iShares MSCI Emerging Markets Index Fund (NYSEArca:EEM). The portfolio weights of the underlying index components are rebalanced monthly.
The IQ Hedge Multi-Strategy Tracker ETF is the first in a planned series of alternative investment ETFs that are to be based on proprietary indexes developed by IndexIQ. Unlike traditional market indexes, which track the performance of publicly-traded issuers representing a market or industry sector, the IndexIQ indexes provide exposure to alternative investment asset classes, including the IQ Hedge family of indexes, which track the returns of distinct hedge fund investing styles.
The fund's annual expense ratio is 0.75%.
"A large body of academic research shows that one need not necessarily invest directly in a hedge fund to capture much of the potential benefits of the various hedge fund strategies," said Professor Robert F. Whitelaw, chief investment strategist of IndexIQ, and Chairman of the Finance Department at NYU's Stern School of Business.
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