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IQ Alpha Hedge Strategy Fund celebrates two-year anniversary


The IQ Alpha Hedge Strategy Fund, the first no-load, open-end mutual fund designed to replicate broad-based hedge fund performance characteristics, has marked its two-year anniversary.

“The past two years have seen explosive demand for liquid, transparent hedge fund-like exposures, as investors of all types and sizes seek to mitigate market volatility while maintaining exposure to potential upward moves,” says Adam Patti, chief executive officer at IndexIQ.

“With our mutual fund now having been live for more than two years, we have established a real world track record demonstrating how the fund performs through an extraordinarily challenging time. To date, both the returns and the volatility have been in line with what we anticipated when we launched the fund in 2008.”

The fund uses a rules-based methodology to 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 relative weights among these six hedge fund strategies are adjusted monthly based on the movement of global markets.

The fund seeks to achieve investment results that correspond to the total return of the IQ Alpha Hedge Index. The objective of the index is to provide superior returns with lower volatility relative to the Standard & Poor’s 500, and with a correlation similar to that between hedge funds generally and the S&P.

“In examining performance attribution, a number of factors have contributed to returns over the past two years,” says Patti. “These include the fund’s long exposures, through investments in ETFs, to the corporate bond market, our overall hedged position to the equity market by going short small cap equity and long emerging market equity, and short exposure to the Euro. The fund also benefited from positions in broad bond ETFs as interest rates remained at historical lows.”

The fund is available for purchase on several platforms, including Morgan Stanley Smith Barney, UBS, Schwab, Fidelity, Pershing, TD Ameritrade, E-Trade, Commonwealth Financial Network, Cambridge Investment Research, Mesirow Financial, MG Trust Company, MSCS Financial Services, and National Financial Services.

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