A Smart Beta, Institutional Level ETF Strategy to Access the Small Cap Segment

IndexIQ has partnered with Chaikin Analytics to expand on its smart beta, factor-based exchange traded fund line up with its first domestic equity-focused strategy and a timely small cap play for the market environment ahead.

On Tuesday, IndexIQ launched the IQ Chaikin U.S. Small Cap ETF (NasdaqGM: CSML).

“We bridge the gap between active and passive investment,” Marc Chaikin, Founder and CEO of Chaikin Analytics, told ETF Trends in a call. “The strategy provides the best of active and passive investment.”

The IQ Chaikin U.S. Small Cap ETF tries to reflect the performance of the Nasdaq Chaikin Power US Small Cap Index, which applies a shareholder yield screen and the so-called Chaikin Power Gauge, a quantitative multi-factor model that tries to identify securities that are expected to outperform their peers, to select components from the Nasdaq US 1500 Index. The target focus will include small capitalization stocks.

“The Chaikin Power Gauge works because it incorporates several factors that institutional investors use everyday,” Carlton Neel, Chief Operating Officer at Chaikin Analytics, told ETF Trends.

Chaikin explained that after 2008, institutional investors required an unbiased way to make smarter and better investment decisions. Consequently, his analytic firm developed the power gauge methodology to sort out the best stocks in the current market environment.