IndexIQ partners with Nasdaq Dorsey Wright on liquid alternative ETF model

Oct 4th, 2019 | By | Category: Alternatives / Multi-Asset

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IndexIQ, in partnership with Nasdaq Dorsey Wright, has launched the IQ Alternative Allocation Model.

Jon Zimmerman, Chief Operating Officer at IndexIQ

Jon Zimmerman, Chief Operating Officer at IndexIQ.

The model provides advisors with an absolute return strategy built around IndexIQ’s suite of liquid alternative ETFs and powered by Nasdaq Dorsey Wright’s relative-strength expertise.

Relative strength in this context compares the price performance, or momentum, between securities.

According to the philosophy, the absolute momentum of the individual securities is not as important as the relative momentum between them.

Nasdaq Dorsey Wright’s approach determines whether momentum is increasing relative to another security and assigns a buy signal if it is. The securities are then ranked in descending order according to their cumulative number of buy signals.

The IQ Alternative Allocation Model ranks IndexIQ’s suite of six liquid alternative ETFs according to their relative strength. The model selects the top two ETFs and equally weights them. Reconstitution and rebalancing occur monthly.

The model will be available with no overlay fee to financial advisors and registered investment advisors who subscribe to Nasdaq Dorsey Wright’s platform.

Jon Zimmerman, Chief Operating Officer at IndexIQ, commented, “We are delighted to partner with Nasdaq Dorsey Wright to leverage their unparalleled methodology alongside our established expertise in liquid alternative ETFs to offer advisors and their clients lower-cost, innovative hedge fund strategies in a unique investment model.”

Jay Gragnani, Head of Research and Client Engagement with Nasdaq Dorsey Wright, added, “IndexIQ’s suite of liquid alternatives ETFs offers advisors access to non-traditional and differentiated strategies which can be especially valuable for advisors in today’s market. Our work with IndexIQ gives investors access to a uniquely designed liquid alternative ETF model as they look to build diversified investment portfolios.”

IndexIQ’s liquid alternative ETF suite

Coinciding with the model launch, IndexIQ has reduced the fees on four of the six liquid alternative funds via a management fee waiver of 0.35%. The six funds are outlined below.

The IQ Merger Arbitrage ETF (MNA US) tracks the IQ Merger Arbitrage Index which consists of companies globally for which there has been a public announcement of a takeover by an acquirer. The fund comes with an expense ratio of 0.75%.

The IQ Hedge Long/Short ETF (QLS US) tracks the IQ Hedge Long/Short Index which replicates the risk-adjusted return characteristics of hedge funds that are pursuing long/short strategies. The fund’s expense ratio has been reduced from 1.02% to 0.67%.

The IQ Hedge Event-Driven Tracker ETF (QED US) tracks the IQ Hedge Event-Driven Index which replicates the risk-adjusted return characteristics of hedge funds that are pursuing event-driven strategies. The fund’s expense ratio has been reduced from 1.13% to 0.78%.

The IQ Hedge Market Neutral Tracker ETF (QMN US) tracks the IQ Hedge Market Neutral Index which replicates the risk-adjusted return characteristics of hedge funds pursuing market neutral strategies.

The IQ Hedge Macro Tracker ETF (MCRO US) tracks the IQ Hedge Macro Index which replicates the risk-adjusted return characteristics of a combination of hedge funds pursuing macro strategies and hedge funds pursuing emerging markets strategies. The fund’s expense ratio has been reduced from 1.04% to 0.69%.

The IQ Real Return ETF (CPI US) tracks the IQ Real Return Index which seeks to provide a return above the rate of US inflation by tracking a range of asset classes with returns that incorporate inflation expectations. The fund’s expense ratio has been reduced from 1.02% to 0.67%.

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