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First liquid alternative ETF marks fifth anniversary

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The first and largest hedge fund-style exchange-traded fund, the IQ Hedge Multi-Strategy Tracker ETF (QAI), now holds more than USD690m in assets.

The fund, which turned five years old on 25 March, anchors a growing family of liquid alternative investment solutions, according to IndexIQ, the fund’s sponsor and developer of index-based alternative investment solutions.
 
Adam Patti, chief executive officer at IndexIQ, says 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 says. “Now that advisors understand the importance of alternatives for portfolio diversification, they also are realising 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.”
 
QAI seeks to track, before fees and expenses, the performance of the IQ Hedge Multi-Strategy Index. The index, part of a family of investable benchmark hedge fund replication indexes that have been calculating live since 2007, attempts to replicate the risk-adjusted return characteristics of hedge funds using various hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets. 

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