IndexIQ, a developer of index-based alternative investment solutions, is introducing the first in a series of single-country small cap exchange-traded funds focusing on the domestic markets in Canada and Australia.
IQ Canada Small Cap ETF seeks to replicate, before fees and expenses, the performance of the IQ Canada Small Cap Index.
IQ Australia Small Cap ETF seeks to replicate, before fees and expenses, the performance of the IQ Australia Small Cap Index.
They are intended to give investors a means of passively tracking the overall performance of the small-capitalization sector of publicly traded companies domiciled and primarily listed on exchanges in Canada or Australia, respectively.
Both funds are designed to provide additional Alpha exposure as satellite holdings built around an investor’s core equity portfolio.
“Investors targeting Canada or Australia typically have been required to invest in funds with broad-based exposure to large cap and global companies domiciled or operating in these markets,” says Adam Patti, chief executive officer at IndexIQ. “However, these domestic economies have their own important dynamics, driven by oil, gas and metals production in Canada, and coal and metals production in Australia.CNDA and KROO are vehicles dedicated to providing investment exposure to the domestic growth potential of these two countries.”
To be included in the indexes, companies must have a minimum average market capitalization of USD150m for the prior 90-day period. The average maximum capitalisation must be equal to the bottom 15 per cent ranking of companies in Canada or Australia based on the prior 90 days. Stocks are required to have a minimum average daily trading volume of at least USD1m for the prior 90 days, and a minimum monthly volume of 250,000 shares for the prior six months. For both indexes, the components and their respective weights are rebalanced quarterly.