Currently, QAI is heavily titled toward short-term debt, with top components including a 23.7% position in mixed short-term bonds 19% in short-term Treasuries. The ETF is built like a fund-of-funds, with top holdings including Vanguard Total Bond Market ETF (NYSEArca: BND), Vanguard Short-Term Bond ETF (NYSEArca: BSV), iShares 1-3 Year Treasury Bond ETF (NYSEArca: SHY) and iShares Short Treasury Bond ETF (NYSEArca: SHV).
However, investors should be aware that the ETF does not solely invest in fixed-income assets. QAI’s current holdings also include a spattering of currencies, emerging market small-caps, developed EAFE small-caps, real estate investment trusts and some U.S. stocks.
Potential investors should be aware that these types of alternative investments are not meant as growth strategies to generate outsized returns in their portfolios. In reality, these strategies are doing exactly what they were made for, diminishing volatility. Consequently, in bullish market conditions, the strategies may underperform, but if the markets turn, this type of alternative strategy can shine. [Hedge Market Risks with Alternative Investments, ETFs]
For more information on index strategies, visit our indexing category.
Max Chen contributed to this article.