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Three IndexIQ ETFs mark Fifth anniversary


Three of IndexIQ’s pioneering liquid alternative exchange-traded funds (ETFs) have marked their five-year anniversaries.

The IQ Merger Arbitrage ETF (NYSE Arca: MNA), the first ETF designed to give investors exposure to the global corporate mergers and acquisitions (M&A) marketplace, turned five on 17 November. The IQ Global Resources ETF (NYSE Arca: GRES), the first global resources hedged ETF, and the IQ Real Return ETF (NYSE Arca: CPI), which uses a multi-asset class approach in seeking to deliver a “real return” above the US inflation rate, both reached the five-year mark on 27 October.

“We designed MNA and its underlying index to provide investors with broad-based exposure to the global M&A market,” says Adam Patti, chief executive officer at IndexIQ. “This year has been one of the strongest on record for M&A activity, a trend that appears likely to continue into 2015. This should drive even more opportunities for the fund to take advantage of the merger arbitrage strategy.”

MNA was designed to provide capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer, a strategy generally known as “merger arbitrage.” 

This strategy generally seeks to take advantage of the price differential, where it exists, between the current trading price of a stock and the price of that stock at the time the deal is completed. It seeks to track, before fees and expenses, the performance of the IQ Merger Arbitrage Index.

“Five years ago, when we looked at the landscape of inflation hedging products, we believed there was an opportunity to improve on what was then available to investors,” sasaysid Patti. “In our view, Treasury Inflation Protected Securities (TIPS), gold, and real estate all had weaknesses individually as inflation hedges. Our approach is built upon exposure to multiple asset classes, which we believe is a better way to achieve investor objectives.”

CPI seeks investment results that correspond, before fees and expenses, to the price and yield performance of the IQ Real Return Index. The Index provides exposures to asset classes whose returns are believed to incorporate inflation expectations, and may include gold, US treasuries, emerging markets equities, and real estate, among others.

“GRES was designed as a vehicle for providing the broadest possible exposure to global commodities with relatively low volatility,” says Patti. “Over the past five years, we have seen substantial ups and downs in commodities, and throughout this timeframe, GRES has performed as we had hoped. We believe the long-term trends favouring growth in demand for this asset class remain intact.”

GRES seeks investment results that correspond, before fees and expenses, to the price and yield performance of the IQ Global Resources Index. GRES provides broad-based exposure across eight sectors of the Commodity and Global Natural Resources space, including the major commodity sectors (Precious Metals, Industrial Metals, Livestock, Energy, and Grains, Food & Fiber), plus Timber, Water and Coal. The fund is diversified geographically and by sector, with its components collectively representing one of the broadest commodity and natural resource exposures in the ETF industry. The fund has no K-1 and does not suffer from contango and backwardation.

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