No one has refrained from saying that there is beginning to be an ETF for almost every index or every strategy out there. Now there is a hedge fund ETF. Enter the IQ®Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI).
This new ETF seeks to replicate the returns of the IQ®Hedge Multi-Strategy Index, which was designed to capture the risk-adjusted return characteristics of the collective hedge fund universe using multiple hedge fund investment styles. This strategy includes long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, and emerging markets.
What gets interesting here is that it uses ETF’s in the ETF’s and gives intra-day liquidity, transparency, and lower fees than most hedge funds. It uses a wide variety of liquid ETFs already in the market. More importantly, this does not invest in actual hedge funds.
IndexIQ utilizes its unique Rules-Based Alpha™philosophy to design and build innovative investment products, combining the benefits of traditional indexing with the risk-adjusted return potential sought by the best active managers.
The IQ®Hedge Multi-Strategy Tracker ETF is also said to be the first in a planned series of alternative investment ETFs. This ETF’s constituents are existing ETFs currently available in the marketplace. IQ calls it essentially an ETF that is like a “fund of funds.”
The fund’s expense ratio will be 0.75%. So no “2% and 20%” here. But here is what you need to know. The overall success of this ETF is likely going to be dependent upon two issues: its portfolio mix, which ultimately leads to its performance AND its liquidity and trading volume. So far the trading volume has been light in the first 3 trading sessions, but not so light that traders can’t use it.
Here are the top ETF holdings:
iSHARES Barclays Aggregate (NYSE: AGG) 23.91 %
iShares Lehman Aggregate Bond 23.91 %
iSHARES BARCLAYS 1-3 YEAR TR 18.31 %
iShares Lehman 1-3 Year Treasu 18.31 %
ISHARES MSCI Emerging Markets Index ETF (NYSE: EEM) 11.04 %
JON C. OGG
More information can be found at http://www.indexiq.com/etfs/etfsiqh/etfsiqhmultistrat.html