The leading developer of liquid alternative investment products, IndexIQ, launched two new ETFs Tuesday. The IQ Hedge Long/Short Tracker ETF (NYSE: QLS) and the IQ Hedge Event-Driven Tracker ETF (NYSE: QED), are the fifth and sixth additions to IndexIQ's hedge fund replication product portfolio.
Hedge Fund Replication Product Portfolio
With the addition of the two new ETFs, IndexIQ has covered the four major hedge fund categories (equity hedge or long/short, event-driven, market neutral and global macro).
The new ETFs aim to provide investment results similar to that of a hedge fund; however, they offer high liquidity. This is a luxury that is not usually afforded in the alternative investment world, as investors' money is typically locked up for a period of time.
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Both ETFs use a series of short and long positions to take a position on one side, while hedging on the other side to hedge in the event of a market move in an unexpected direction. The new ETFs, along with IndexIQ's existing products, allow investors to create a hedge fund style portfolio with lower costs and more liquid ETFs.
IQ Hedge Long/Short Tracker ETF
QLS is made up of 18 long and 21 short ETFs, for a total of 39 positions. The ETF seeks to provide performance similar to a long/short hedge fund with low correlation to the equity market.
The top individual holdings include:
- PowerShares Exchange-Traded Fund Trust II (NYSE: BKLN) with a 29.7 percent holding
- iShares IBoxx $ Invest Grade Corp Bd Fd (NYSE: LQD) making up 12.9 percent of the ETF
- iShares Russell 2000 Growth Index (ETF) (NYSE: IWO) coming in at 10.9 percent
The largest short position is the iShares MSCI Emerging Markets Indx (ETF) (NYSE: EEM) at 9.8 percent allocation.
QLS began trading Tuesday at $20 and has an expense ratio of 1.10 percent.
IQ Hedge Event-Driven Tracker ETF
QED is made up of 20 ETFs with nine long positions and 11 short positions. The ETF seeks to provide investment results similar to hedge funds that use an event-driven strategy.
The top individual holding include:
- SPDR Barclays Convertible SecETF (NYSE: CWB) making up 42 percent of the ETF
- Vanguard Total Bond Market ETF (NYSE: BND) at 21.4 percent
- iShares Barclays Aggregate Bond Fund (NYSE: AGG) totaling 19.8 percent
The largest short position is the iShares S&P 500 Growth Index (ETF) (NYSE: IVW) with a 7.6 percent holding.
The new ETF began trading Tuesday at $20 and has an expense ratio of 1.00 percent.
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