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.
Specifically, QGTA includes about 50 ETFs. Top holdings include iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) 18.8%, Vanguard FTSE Developed Markets ETF (NYSEArca: VEA) 17.1% and SPDR Barclays Convertible Securities ETF (NYSEArca: CWB) 10.1%.
“Since 2007, our replication technology has proven to successfully replicate opaque hedge fund strategies,” Patti added. “This same technology is being used to provide the performance of market leading global allocation mutual funds, however with a lower fee, far greater tax efficiency and full transparency.”
Index IQ also offers the popular hedge-fund replication ETF, the IQ Hedge Multi-Strategy ETF (NYSEArca: QAI), which provides a diversified mix of alternative strategies, including multiple hedge fund investment styles, such as long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets. [Hedge Rate Risk with a Multi-Strategy ETF]
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.