IndexIQ has launched the first ETF designed to replicate the risk and return profiles of global m...
IndexIQ has launched the first ETF designed to replicate the risk and return profiles of global macro and emerging markets hedge fund strategies. The IQ Hedge Macro Tracker ETF is based on the IQ Hedge Macro Index.
Typically, global macro hedge fund strategies seek investment opportunities across the globe and implement a top-down approach to highlight market inefficiencies and dislocations. These strategies tend to invest in a range of instruments and asset classes, such as stocks, bonds, commodities and currencies.
Emerging markets strategies tend to seek investment opportunities in developing markets such as Brazil, Russia, India and China (BRIC).
The combination of the two strategies is designed to deliver broad asset-class exposure with an emphasis on emerging markets. This strategy also aims to reduce the overall volatility of the portfolio, as research by Factset, Bloomberg and IndexIQ shows emerging markets equities reveal higher volatility than emerging markets hedge fund strategies, which in turn show higher volatility than global macro hedge fund strategies.
The index uses a proprietary rules-based methodology, which indicates whether to increase or decrease the relative weightings of the macro and emerging market components.
Although the index is based on data from hedge fund strategy returns, the ETF does not invest directly in hedge funds, but rather replicates the risk and return profiles of strategies based on existing ETFs. As a result, the fund is effectively an ETF of ETFs.
IndexIQ chief executive officer Adam S Patti says: "The goal with the IQ Hedge Macro Tracker ETF is to provide investors with exposure to the high-growth segments of global markets and asset classes, emphasising the importance of emerging markets, while managing overall portfolio volatility."
He adds: "The fund is designed to play a role in the portfolio of investors interested in both alternative asset classes and traditional emerging markets."
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