IndexIQ Bolsters Hedge Fund Replication Suite With Two New ETFs
IndexIQ, the Rye, New York-based exchange traded funds issuer known for its unique suite of hedge fund replication ETFs, bolstered that lineup today with the debuts of the IQ Hedge Long/Short Tracker ETF (QLS) and the IQ Hedge Event-Driven Tracker ETF (QED) .
IndexIQ has achieved success with hedge fund replication ETFs, such as the IndexIQ Hedge Multi-Strategy ETF (QAI) , which topped $1 billion in assets under management earlier this year.QAI, the largest hedge fund strategy ETF, tries to reflect the risk-adjusted return characteristics of hedge funds through various hedge fund investment styles, such as long/short equity, global macro, market neutral, event driven, fixed-income arbitrage and emerging markets. [ETFs a Better way to Hedge Funds]
The Index IQ Merger Arbitrage ETF (MNA) has more than quadrupled in size to $100 million in assets under management over the past year, according to Bloomberg. [Be an MNA Pro With This ETF]
The IQ Hedge Long/Short Tracker ETF IQ Hedge Long/Short Index, an index designed to mirror hedge funds’ long/short strategies. Like other IndexIQ ETFs, QLS features other ETFs among its top holdings. QLS allocates over 42% of its combined weight to the PowerShares Senior Loan Portfolio (BKLN) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) . The SPDR S&P 500 ETF (SPY) , the world’s largest ETF, is also a top five holding in QLS, according to IndexIQ data.
QLS’ index beta against the S&P 500 is 0.64 and its dividend yield is 2.94%, according to issuer data. The new ETF charges 0.75% per year.
The IQ Hedge Event-Driven Tracker ETF tracks the IQ Hedge Event-Driven Index, a benchmark designed to mirror hedge funds’ event-driven strategies. QED also implements an ETF of ETFs approach and is heavy on fixed income ETFs.
Event-driven hedge fund managers typically invest in a combination of credit opportunities, such as high yield, leveraged loans, and capital structure arbitrage, and event-driven equities, such as risk arbitrage, holding company arbitrage, and special situations, which can include companies under pressure from activist investors, according to IndexIQ.
The SPDR Barclays Convertible Securities ETF (CWB) commands over 42% of QED’s weight while the Vanguard Total Bond Market ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG) combine for over 41% of QED’s weight. QED also charges 0.75% per year.
“With the addition of QED and QLS to its family of liquid alternative hedge fund replication vehicles, IndexIQ now offers an ETF designed to track each of the four major hedge fund categories (Event-Driven, Equity Hedge or Long/Short, Market Neutral and Global Macro),” said the issuer in a statement.
In December, insurance giant New York Life said its New York Life Investment Management (NYLIM) unit, the company’s third party global asset management business, will acquire exchange traded funds provider IndexIQ for an undisclosed sum.
ETF Trends editorial team contributed to this post.
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