IndexIQ, a leading developer of index-based liquid alternative investment solutions, saw assets under management (AUM) jump 37 percent in 2013 to $1.125 billion, driven in part by its IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI ), the first hedge fund-style ETF and the industry’s largest alternative exchange-traded fund, which more than doubled in size during the period, ending the year with nearly $630 million in assets. In addition, IndexIQ continued to invest in its future growth during the year, expanding the sales force to include two new external wholesalers, covering the western and eastern territories, and bringing three new internal wholesalers on board. “We are pleased to see our education-focused approach to the market recognized by financial advisors and investors during 2013, with our families of liquid alternative ETFs and real asset ETFs attracting new assets,” said Adam Patti, chief executive officer at IndexIQ. “QAI in particular is viewed as a potentially strong alternative for investors looking to generate income but concerned about the potential impact of rising interest rates on bonds. Investors are seeking alternatives to their fixed income allocations, and QAI has proven itself an excellent choice, having outperformed the aggregate bond market in 2013 by 7.5% * with a similar volatility profile.” As of December 31, 2013, QAI performed as follows:
|Quarter||1 Year||3 Year||Since FundInception*|
|QAI Share Price||2.69%||5.49%||3.14%||4.46%|
|Barclays Capital US Aggregate Index||-0.14%||-2.02%||3.26%||4.73%|
ETF model portfolios growingIndexIQ’s model portfolios, which provide diversified exposure to a wide range of asset classes by investing in ETFs, continued to generate interest in the market, with multiple new advisory firms adding the portfolios to their investment platforms. “ETF model portfolios have continued to gain traction in the marketplace, a trend we believe will accelerate in 2014,” said Patti. “With that in mind, we have focused on building out our distribution platform to make our family of model portfolios available to a broader range of financial advisors and their clients.” The IndexIQ family of ETFs and mutual fund are designed to be liquid, transparent, and low cost. * Many were the first of their kind to be introduced to the market. In addition to the funds mentioned above, they include:
- IQ Alpha Hedge Strategy Fund (IQHIX – Institutional Share Class; IQHOX – Investor Share Class), the first open-end, no-load hedge fund replication mutual fund;
- IQ Hedge Macro Tracker ETF (NYSE Arca: MCRO), the first Global Macro/Emerging Markets hedge fund replication ETF;
- IQ Real Return ETF (NYSE Arca: CPI), the first US-listed “real return” ETF, which seeks to generate a real return above the rate of inflation as measured by changes in the Consumer Price Index;
- IQ Global Resources ETF (NYSE Arca: GRES), the first hedged global natural resources ETF;
- IQ Global Agribusiness Small Cap ETF (NYSE Arca: CROP), the first agribusiness small cap ETF;
- IQ Global Oil Small Cap ETF (NYSE Arca: IOIL), the first global oil small cap ETF;
- IQ Canada Small Cap ETF (NYSE Arca: CNDA), the first Canada small cap ETF;
- IQ Australia Small Cap ETF (NYSE Arca: KROO), the first Australia small cap ETF.
**IndexIQ’s ETF holdings are available daily on IndexIQ’s website. Brokerage commissions apply to ETFs. ETFs are liquid in that they are exchange-traded. There are differences between investing in bonds and investing in liquid alternative ETFs. A bond is a debt instrument in which an investor loans money to a corporate or government entity that borrows the funds for a specified period of time at a fixed interest rate. Investors typically receive interest on the bonds when they mature. Bond funds hold a portfolio of bonds and can differ widely in strategies, ranging from U.S. Treasuries to high yields, from long-term to short-term. By contract, liquid alternative ETFs typically hold many non-bond securities, but provide investors with many of the same attributes as bond investing, such as dividend yield, lower volatility, and tax efficiency in terms of reduced capital gains distributions.QAI and QMN (the “Funds”) are non-diversified and susceptible to greater losses if a single portfolio investment declines than would a diversified mutual fund. The Funds’ underlying ETFs invest in: foreign securities, which subject them to risk of loss not typically associated with domestic markets, such as currency fluctuations and political uncertainty; commodities markets, which subject them to greater volatility than investments in traditional securities, such as stocks and bonds; and fixed income securities, which subject them to credit risk; the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt; and interest rate risk; changes in the value of a fixed-income security resulting from changes in interest rates. Leverage, including borrowing, will cause some of the Funds’ underlying ETFs to be more volatile than if the underlying ETFs had not been leveraged. As ROOF’s investments are concentrated in the real estate sector, it is exposed to concentration risk, interest rate risk, leverage risk, property risk and management risk. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies. The Fund is non-diversified and is susceptible to greater losses if a single portfolio investment declines than would a diversified fund. The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund's Shares and the possibility of significant losses.
MNA: Certain of the proposed takeover transactions in which the Fund invests may be renegotiated, terminated or involve a longer time frame than originally contemplated, which may negatively impact the Fund’s returns. The Fund’s investment strategy may result in high portfolio turnover, which, in turn, may result in increased transaction costs to the Fund and lower total returns. The Fund is susceptible to foreign securities risk – since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets, including currency transaction risk. Diversification does not eliminate the risk of experiencing investment losses. Stock prices of mid and small capitalization companies generally are more volatile than those of larger companies and also more vulnerable than those of larger capitalization companies to adverse economic developments. The Fund is non-diversified and is susceptible to greater losses if a single portfolio investment declines than would a diversified fund. The ETF should be considered a speculative investment with a high degree of risk, does not represent a complete investment program and is not suitable for all investors.Index performance does not reflect charges and expenses associated with the Funds or brokerage commissions associated with buying and selling ETF shares. One cannot invest directly in an index. Investors are reminded that all investing involves risk, including possible loss of principal. Consider the Funds’ investment objectives, risks, charges and expenses carefully before investing. A prospectus with this and other information about the Funds may be obtained by visiting www.indexiq.com or by calling (888) 934-0777. The ROOF prospectus can be obtained here: http://www.indexiq.com/docs/roof/summary_prospectus_roof.pdf Read the prospectus carefully before investing. IndexIQ ETFs and mutual funds are distributed by ALPS Distributors, Inc. (ALPS), which is not affiliated with IndexIQ, and which does not distribute model portfolios. Adam Patti is a registered representative of ALPS. IDX001397.010815