IndexIQ Revamps CPI ETF to Better Reflect Evolving Inflation Landscape

IndexIQ has revamped the IQ Real Return ETF (CPI) to better reflect the evolving inflation landscape and marketplace.

As part of the changes, CPI is now tracking the Bloomberg IQ Multi-Asset Inflation Index in a new relationship with Bloomberg Index Services Limited, with the objective of providing investors with better inflation exposure, effective February 28.

“Inflation risk is one of the biggest concerns for investors and their portfolios right now. As we recently heard from Chairman Powell, the Fed is continuing to monitor this data, eyeing rate hikes and a potential faster tightening than had previously been expected,” Sal Bruno, CIO at IndexIQ, said. 

“It’s a crucial time for investors to have access to best-in-class tools that have the potential to dampen the effects of high inflationary periods and we believe these updates to the Index that underlies our CPI ETF, including the reduction of the management fee, reflect the current economic environment and suit the marketplace’s needs for ways to help mitigate the impacts of inflation,” Bruno continued.

Under the index change, the fund aims to provide investors with a hedge against the inflation rate by providing diversified exposure to assets that have historically exhibited positive sensitivity to the Consumer Price Index. The Bloomberg IQ Multi-Asset Inflation Index is composed of U.S. Treasury Inflation-Protected Securities (TIPS) of short-, intermediate-, and long-term maturities; U.S. large-capitalization equity securities; and commodities, which will principally include exposure through pooled vehicles, according to a statement from the firm.

Additionally, the management fee of the fund has also decreased from 0.48% to 0.29%, making it one of the more competitively priced inflation-focused ETFs on the market.

Dave Gedeon, Bloomberg global head of multi-asset indices, said in a statement that the firm built a thoughtful process to address the complex impacts of inflation on portfolios and is excited to partner with IndexIQ in delivering the Bloomberg IQ Multi-Asset Inflation Index as the new benchmark for CPI.

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