Even as the market for liquid alternative products has become more competitive over the last several years, the industry’s first and largest hedge fund-style Exchange Traded Fund (ETF), the IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI), has continued to grow and attract new assets. 1 The fund, which turned five years old on March 25th, now holds more than $690 million in assets and anchors a growing family of liquid alternative investment solutions, according to IndexIQ, the fund’s sponsor and a leading developer of index-based alternative investment solutions.
“Since we launched QAI, we have seen many new competitors enter the market for alternatives with both 40-Act mutual funds and ETFs,” said Adam Patti, chief executive officer at IndexIQ. “This has included some of the biggest and best known names in the investment world, many of whom have struggled to find a foothold in the space. At the same time, QAI has continued to grow, bringing in new assets and investors. We think this speaks to the unique nature of the fund and the various core roles it can play in an investor’s portfolio.”
Patti noted that in the low interest rate environment of the last several years, many advisors have been using QAI as a “bond substitute,” to retain the lower volatility of fixed income in their portfolios, while maintaining exposure to potential appreciation in price as interest rates rise.
“The beauty of alternatives like QAI is that they add flexibility to a portfolio, as a core holding for investors seeking alternative and hedge fund exposure,” Patti said. “Now that advisors understand the importance of alternatives for portfolio diversification, they also are realizing the lack of other options in the market with the length of track-record and the asset size of QAI. As a result, QAI has rapidly become the default option for many advisors seeking liquid, transparent, alternative investment exposure.”