IndexIQ Offers Hedge Fund Returns In Mutual Fund

Jul 3 2008 | 10:53am ET

New York-based IndexIQ has launched what it dubs the first no-load open-end mutual fund based on hedge fund replication, designed to give investors access to hedge fund-like performance characteristics.

The IQ Alpha Hedge Strategy Fund is based on the firm’s belief that “alternative beta”—returns due to varying exposure to different asset classes—is the primary driver of aggregate long-term hedge fund portfolio performance. That beta is captured initially in the IQ Alpha Hedge Index, which uses proprietary algorithms to closely replicate the returns of six major hedge fund strategies: equity long/short, global macro, emerging markets, fixed-income arbitrage, equity market neutral and event-driven.

The fund’s alpha comes from optimizing the relative index weights among these six hedge fund strategies. It employs leverage totaling 25% of the portfolio to magnify returns.

“There is a significant body of academic research that supports the ability of hedge fund replication strategies to capture the characteristics of broad-based hedge fund returns, without the associated costs and risks of investing directly in the underlying strategies,” said Robert Whitelaw, chief investment strategist at IndexIQ. “The IQ Alpha Hedge Strategy Fund employs the latest research and modeling techniques to provide access to these strategies in a low-cost, open-end investment vehicle.”


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of