Inside Two New IndexIQ ETFs Designed for Uncertain Market - ETF News And Commentary

IndexIQ is known for its hedge fund replication and long/short lineup. Its ETFs adopting unusual techniques in the quest for beating market risks are already popular and the issuer now appears to advance fast on the product development front, launching two new products lately. Like its other products, these products hail from the Buy-write and hedge funds categories.

The launches couldn’t be more well-timed given the unstable global economic backdrop. Though the U.S. economy firmed up last year, 2015 saw moderation in growth thanks to stronger dollar. To add to this, the relentless slide in crude oil prices, global economic growth concerns and speculations over the timeline of the first U.S. rate hike after six years are weighing on investors’ sentiments lately and volatility is flaring up.

Let’s take a look at the products in detail.

IQ Hedge Long/Short Tracker ETF (QLS) in Focus

The fund looks to follow the risk-adjusted return features of the collective hedge funds pursuing a long/short strategy. The fund charges 75 bps in fees. QLS is exposed to a variety of asset classes and is made of ETFs (read: 3 Buy-Write ETFs to Protect Against Market Volatility).

Competition: There are a few long/short ETFs presently available in the market with PowerShares S&P 500 BuyWrite Portfolio ETF (PBP) ruling the space with over $400 million in assets. The fund charges 75 bps in fees and yields about 4.05% in dividend (as of April 14, 2015). Over the last one year, the fund has generated about 7% return. With the expense ratio being similar to that of the space leader, the newly launched ETF needs to deliver a sizable current income and decent returns to hoard investors’ money (see  all long-short ETFs here).

IQ Hedge Event-Driven Tracker ETF (QED) in Focus

The IQ Hedge Event-Driven fund seeks to replicate the collective hedge funds pursuing an event-driven strategy. This is done by tracking the price and yield performance of the IQ Hedge Event-Driven Index. Event-Driven hedge funds normally park their money in a basket of credit opportunities and event-driven equities. This group of fund managers targets several asset classes while investing and may also seek to utilize moves in economic cycles. The fund charges 75 bps in fees (read: Beat Hedge Funds with These ETFs).

Competition: The options available in the hedge fund ETFs space are rather few with IndexIQ’s another product IQ Hedge Multi-Strategy Tracker ETF (QAI) being the top asset gather (about $991 million) in the space (see all Hedge Fund ETFs here).

How Do These Fit in a Portfolio?

These ETFs could be appropriate for investors looking for high levels of diversification and capital protection. Investors should note that these are not the ultimate avenues for capital appreciation. After all, low risk investments can prove quite effective in one’s portfolio in arresting downside risks as compared to high beta products. It is now one of the most popular investing themes, given the significant jump in volatility in the global market.

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IQ-HDG L/S TRK (QLS): ETF Research Reports
 
PWRSH-SP5 BUYWR (PBP): ETF Research Reports
 
IQ-HDG E-D TRK (QED): ETF Research Reports
 
IQ-HEDGE MUL-ST (QAI): ETF Research Reports
 
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