New York Life Investment Management (NYLIM) is making its first entry into the ETF industry with the acquisition of IndexIQ, the specialist in the liquid alternative exchange-traded fund industry.
The combination of these two companies brings NYLIM’s powerful global asset management franchise and distribution platform together with IndexIQ’s proven ability to launch sophisticated alternative ETF products.
Upon closing of the transaction, IndexIQ will be integrated into NYLIM and marketed through New York Life's MainStay Investments platform, opening new doors to investors seeking exposure to alternative investments through ETFs. It will add USD1.5 billion to MainStay’s USD101 billion in assets under management.
“Our entry into the ETF space is a significant leap forward for New York Life Investment Management and offers remarkable opportunities all around,” says Drew Lawton, Chief Executive Officer, New York Life Investment Management. “Retail and institutional investors are increasingly attracted to ETFs because they offer a cost-effective, transparent way to access investment opportunities across asset classes around the globe. IndexIQ has established itself as a true innovator and market leader offering the next generation of liquid alternative ETFs, and we intend to leverage IndexIQ’s capabilities to become the dominant provider of non-traditional ETF solutions to the market.”
“IndexIQ will partner with our industry-leading MainStay distribution network to deliver its products to a significantly broader audience of retail and institutional investors around the world,” Lawton adds. “At the same time, IndexIQ provides a robust ETF platform that New York Life can use to consider new and diverse offerings in the future.”
Among its 12 fund offerings, IndexIQ has established a dominant market leadership position with its IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI). This innovative ETF, with nearly six years of live track-record, aims to replicate the risk-adjusted return characteristics of hedge funds using strategies that include long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, emerging markets and other strategies commonly used by hedge fund managers. IndexIQ also offers a mutual fund version of QAI (Ticker: IQHIX/IQHOX) and is a leading “ETF Strategist” offering ETF Models and Separately Managed Accounts.
“This is a win for IndexIQ, for New York Life, and for investors who need smart solutions to achieve a diverse investment portfolio,” says Adam Patti, Chief Executive Officer and Co-Founder of IndexIQ. “Pairing our innovative history and experience with New York Life’s commitment, resources, and reach positions us to continue our leadership in the ETF marketplace, accelerate our development of both alternative and smart beta solutions, and together revolutionise the industry.”
“Our partnership with New York Life marks a major turning point for IndexIQ and the liquid alternative ETF category,” says David Fogel, President and Co-Founder of IndexIQ. “With the backing of New York Life’s robust investment management business we expect to reach a new universe of institutional and retail clients. We are delighted with this new partnership with New York Life, one of America’s iconic brands and one of the few with triple-A ratings for financial strength.”
The transaction is expected to close in the first half of 2015. Terms of the transaction were not disclosed.
RBC Capital Markets acted as exclusive financial advisor to IndexIQ. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to IndexIQ. IndexIQ has received its primary financial backing from FTV Capital led by Ben Cukier, and James Fields, President at Klingenstein, Fields & Co., both of whom are Board Directors of IndexIQ. Ernst & Young Capital Advisors and WeiserMazars LLP also provided services to IndexIQ in connection with the transaction.