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IndexIQ launches IQ Leaders GTAA Tracker ETF

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IndexIQ has launched the IQ Leaders GTAA Tracker ETF providing exposure to the performance and risk characteristics of the leading global allocation mutual funds.

“While the global allocation mutual fund category has been growing over the past few years, assets are highly concentrated among a handful of funds,” says Adam Patti (pictured), CEO of IndexIQ. “Our research has found that global allocation mutual funds, when aggregated, display significant exposures to a set of common asset classes, which spurred the idea behind QGTA; namely that we build an index that has similar exposures to the same asset classes and then create an Exchange Traded Fund to provide exposure to those returns with the price and tax efficiency inherent in the ETF structure, while also eliminating idiosyncratic manager risk.”
 
Similar to IndexIQ’s pioneering IQ Hedge Multi-Strategy Tracker ETF (QAI), QGTA is a fund-of-funds that invests in the components of an underlying index. This index utilizes a proprietary methodology that incorporates a number of factors, including performance and asset size, to identify the leading global allocation mutual funds. QGTA does not invest in these mutual funds itself, but rather in a portfolio of highly liquid, low-cost ETFs that, when taken as a whole, is designed to replicate leading global allocation mutual funds’ aggregate performance.
 
“QAI was the first liquid alternative ETF when it went live in 2009, and it remains the largest in the category, with more than USD1 billion in assets,” says Patti. “In looking for new areas where we could deliver value and unique exposures to investors and advisors, it became clear to us that a similar approach to that behind our successful line of hedge fund replication vehicles could be ported over to the mutual fund world.
 
“Since 2007, our replication technology has proven to successfully replicate opaque hedge fund strategies,” says Patti. “This same technology is being used to provide the performance of market leading global allocation mutual funds, however with a lower fee, far greater tax efficiency and full transparency.”
 
QGTA will have a management fee of 45 basis points, a significantly lower management fee level compared to the top five global allocation funds by assets, which have management fees ranging from 56 bps to 90 bps. The tax efficiency of the ETF structure may also enhance the relative performance of QGTA versus the mutual fund category.

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