IndexIQ Now Plans Debt ETFs
July 06, 2012
Index IQ, the Ryebrook, N.Y.-based fund provider known for its hedge fund replication strategies, is seeking permission from U.S. regulators to expand its footprint in the ETF market with the launch of fixed-income funds.
IndexIQ already sponsors 14 exchange-traded funds that tap into international equities, commodities and natural resources and also markets inflation-hedge and hedge fund replication ETF strategies, all of which are benchmarked by in-house indexes.
Perhaps its most successful fund to date is the hedge-fundlike IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI), which has gathered more than $202 million in just over three years.
Now, the company is hoping to grab some of the investor demand for safe-haven assets. In the first half of the year, investors plowed more than $35 billion into bond funds as they trimmed exposure to riskier assets such as equities in the face of heightened volatility in global markets due to the prevailing sluggish economic environment across many key economies.
The ongoing eurozone debt crisis, a slew of domestic data pointing to slower-than-expected U.S. economic growth and concerns that the Chinese market is also slowing down have all helped prolong a rally in the bond market that brought yields to record lows in recent months.
Interestingly, IndexIQ’s filing requesting exemptions from sections of the Investment Act of 1940 to market fixed-income ETFs also opens the door to market strategies that use indexes from third parties. Its existing ETFs all use in-house indexes, so using such third-party indexes would be something new for the firm.
The prospectus also mentions the possibility of launching ETFs that mix domestic and international equities and debt into one portfolio, in what the company described as a series of “combined funds.”
IndexIQ manages nearly $485 million in assets across its various ETFs, according to IndexUniverse’s “ETF League Table.”