Extreme Market Volatility In August Highlights Track-Record Of Hedge Fund Replication Funds
As the global markets experienced one of their most volatile months in recent memory in August, several funds from IndexIQ, a leader in developing index-based liquid alternative investment products designed to “democratize” the alternative investment landscape, including absolute return, commodity and international investment solutions, outperformed the broad equity markets and the global hedge fund universe with less volatility, according to data released today.
“During periods of extreme volatility like the one we saw in August, investors tend to react out of fear and move out of the markets at exactly the wrong time,” said Adam Patti, CEO of IndexIQ. “By using our hedged products, or absolute return vehicles, investors may be able to dampen volatility, thus allowing them to maintain a consistent strategy of portfolio diversification.”
Among the funds Patti points to are the IQ Hedge Multi-Strategy Tracker ETF (QAI), the IQ Hedge Macro Tracker ETF (MCRO), the IQ Alpha Hedge Strategy Fund (IQHIX), and the IQ Real Return ETF (CPI), all of which are first-of-their-kind funds from IndexIQ designed to help mitigate volatility for investor portfolios, while retaining upside potential. The funds track either the broad performance characteristics of the hedge fund industry (for instance in the case of MCRO, global macro and emerging markets exposure), or provide a hedge against inflation risk (as in the case of the IQ Real Return ETF (CPI)). Following the celebration of its third anniversary, IQHIX was recently awarded a 5-Star overall Morningstar Rating TM and a #3 absolute ranking (and top 3% overall) out of 75 funds in the Multi-alternative category based on risk-adjusted performance.
The following table, showing the year-to-date and month-to-date performance of 4 IndexIQ alternative investment strategies as of August 31st is illustrative, particularly as compared to the performance of the S&P 500, which exhibited month-to-date returns of -5.43% (with 8.32% standard deviation) and year-to-date returns of -1.77% (with 10.44% standard deviation):
|IQ Hedge Multi-Strategy Tracker ETF (QAI)|
|IQ Hedge Macro Tracker ETF (MCRO)|
|IQ Real Return ETF (CPI)|
|IQ Alpha Hedge Strategy Fund (IQHIX)|
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