An ETF That's Given Investors Hedge Fund Strategies For a Decade

In the exchange-traded fund (ETF) space, returns are typically, if not only, the prime focus for investors–as is the case with most investment vehicles, but there’s something to be said about longevity. That’s a milestone that IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI) can attest to and not many funds can.

For QAI, its origin began in the thick of the financial crisis where faith in the capital markets was lacking to say the least. However, out of the stress and strife of a market meltdown came innovation that has stood the test of time.

“Fast forward to 2019, and the fund that was built out of that idea, the IQ Hedge Multi-Strategy Tracker ETF (QAI), is turning 10 years old on March 25th,” wrote Salvatore Bruno, Chief Investment Officer of IndexIQ. “With all the ETFs that have been introduced since, it’s hard to remember just how revolutionary this fund was, and still is.”

Related: IndexIQ Debuts Its First Ever Short-Duration Bond ETF

Innovation Born From a Crisis

Since its inception in 2009, QAI has given investors access to an investment space that was typically relegated to only high-net worth individuals or institutions. With the transparency and liquidity of an ETF wrapper that incorporates multiple hedge fund strategies, QAI opens up the arena to all types of investors irrespective of net worth.

Furthermore, 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.

Core characteristics of QAI:

  • Transparent, low-cost exposure to six dominant hedge fund strategies without manager-specific risk.
  • Conservative core alternative vehicle that does not wholly rely on traditional sources of risk, including interest rates and equity market beta.
  • Largest, oldest, and award winning multi-alternative ETF (Hedgeweek Award Methodology).

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.

“It did not invest directly in hedge funds or include hedge funds as components,” noted Bruno. “It was liquid, trading like a stock on the exchange. It was transparent. Perhaps best of all, its fees were significantly lower than anything charged by a traditional hedge fund.”