IndexIQ, an issuer of mutual funds and ETFs that replicate the investments of hedge funds, this week said some of its most popular products not only bested the performance of the S&P 500 Index, but they also outperformed many of the larger hedge funds, too.
Of course, neither its funds nor the big-boy hedge funds -- to say nothing of the S&P 500 -- have exactly set the world on fire through the first eight months of the year.
“We did better than the big hedge funds,” Adam Patti, CEO of the Ryebrook, N.Y.-based company, told On Wall Street.
Patti explained that the company’s initial product, launched just before the financial crisis hit back in June 2008, replicates a group of six hedge fund strategies.
These include a global macro beta index, a long/short beta index, an event-driven beta index, a market neutral beta index, an emerging markets beta index and a fixed income arbitrage beta index.
The fund showed a loss of -1.63% for August, a loss of -2.84% for the three months ended Aug. 31, and a loss of -1.63% for the year to date through August. During those same three periods, the S&P 500 Index lost -5.68%, -9.39% and -3.08%, respectively.
Patti said the mutual fund, called the IQ Alpha Hedge Strategy Fund (IQHIX), is fully index-based and follows a rules-based investment strategy and is the first such open-end, no-load hedge fund replication product available to individual investors. It was just recently given a five-star rating by Morningstar.
An ETF that replicates the same six indexes, called the IQ Hedge Multi-Strategy Tracker ETF (QAI), launched in 2009 and was the first U.S.-listed hedge fund replication ETF. Also completely rules-based with no active management, according to Patti, its share price performance was even better than the corresponding mutual fund.
For August, it was down -0.65%. For the three-months ended Aug. 31, it was down -1.04% and for the year to date ended Aug. 31, it was up 0.51%.
In addition to its original mutual fund, IndexIQ offers15 ETFs, including funds that focus on alternative assets such as U.S. real estate small-cap, global agribusiness small-cap and global oil small-cap. It also serves up regional assets, such as Canada small-cap, South Korea small-cap and Hong Kong small-cap funds.