With the S&P 500 experience the longest bull market in history and breaking the 2,900-point milestone, the capital markets are certainly reigned by the bulls, but what strategies should investors use when the bears regain control or the market plateaus?
Rather than implement one strategy based on current market environs, investors can use a one-size-fits-all exchange-traded fund that mimics hedge fund strategies with the IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI).
QAI seeks investment results that correspond generally to the IQ Hedge Multi-Strategy Index, which includes investments in underlying funds that meet IndexIQ’s rules-based methodology. The goal is to mirror the risk-adjusted return characteristics of hedge funds by incorporating various hedge fund investment styles–long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets.
By using a multi-strategy methodology, QAI can thrive in a market environment whether the bulls or bears are reigning. This speaks to the adaptability of QAI that Salvatore Bruno, Chief Investment Officer of IndexIQ, describes as a “mostly independent way of deriving returns from various types of risks in all markets, as an absolute return expectation should act.”
While QAI won’t thrive in a raging bull market like the current run compared to unfettered exposure to the S&P 500, it can meld with an investor’s portfolio if a market drawdown were to occur if the said investor is willing to assume the risk associated with multiple strategies.