Expanding on the success of its hedge fund replication strategies, Index IQ has come out with a new exchange traded fund that tries to track the best global tactical asset allocation mutual funds.
According to a press release, the IQ Leaders GTAA Tracker ETF (NYSEArca: QGTA) began trading Wednesday. The new fund has a 0.45% expense ratio.
QGTA will try to reflect the performance of the IQ Leaders GTAA Index, which tracks the top 10 leading global allocation mutual funds based on fund performance and asset size. Global tactical asset allocation, or GTAA, is a form of active management portfolio strategy that rebalances the percentage of assets held in various categories to capitalize off market pricing anomalies or strong market sectors across the globe. Portfolio managers would try to create value by exploiting short-term events and typically focus on general moves.
“While the global allocation mutual fund category has been growing over the past few years, assets are highly concentrated among a handful of funds,” Adam Patti, CEO of IndexIQ, said in the press release. “Our research has found that global allocation mutual funds, when aggregated, display significant exposures to a set of common asset classes, which spurred the idea behind QGTA.”
QGTA acts like a fund-of-funds. The underlying index does not invest in mutual funds itself but rather a portfolio of highly liquid, low-cost ETFs that should allow QGTA to replicate leading global allocation mutual funds’ aggregate performance.