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An overview of QAI: the S&P 500 of the hedge-fund market

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IQ Hedge Multi-Strategy Tracker ETF overview

The IQ Hedge Multi-Strategy Tracker ETF (QAI), also known as the S&P 500 Index (SPY) of the hedge-fund market, has around $950 million in assets under management. So far in 2014, the QAI has attracted more than $300 million in new investments, comprising almost a third of its assets, according to S&P Capital IQ.

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QAI: Top Holdings

According to the IndexIQ website, the top holdings of QAI included the Vanguard Total Bond Market ETF (BND), the PowerShares Senior Loan ETF (BKLN), and the iShares Russell 2000 Growth ETF (IWO), among others.

QAI: Investment Strategy

The QAI 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
  • Emerging markets

QAI: Expenses and Returns

The QAI’s 0.91% expense ratio is modest compared with fees that a typical hedge fund charges. In recent months, the firm has invested heavily in sales and marketing to heighten its awareness among ETF investors.

QAI has returned 3.18% to its investors as of December 8, 2014, a notch above its five-year average returns of 3.12%. Since inception, the fund has returned about 4.45% in average annual returns to its investors.

The next part of this series analyzes how IndexIQ fits into New York Life Insurance Co.’s growth plans, as well as the benefits the life insurer seeks to get from it.

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