The proliferation of ETFs has opened up the investable universe to virtually anyone with a brokerage account; novice investors can trade alongside seasoned money managers in any number of asset classes that were previously simply out-of-reach for most, with everything from emerging markets bonds to commodities and in between. With innovation comes complexity, however, and with over 1,400 ETPs to choose from, some investors areundoubtedlyintimidated by the sheer product lineup. Luckily, the ETF Database offers investors an easy, clear cut way to sort through products that fall in the same corner of the market. ETFdb Realtime Ratingsease the product-selectionburdenby offering a transparent, rules-based framework for evaluating the efficiency of exchange-traded funds in the same category. Take for example hedge fund ETFs; with over a dozen offerings in this ETFdb Category, it's no wonder that many can themselves struggling when it comes time to distinguish between all of these similar funds .

ETFdb Realtime Ratings make it easier to narrow down your list of potential investments by assigning an objective score to each product. Each ETP is assigned a Realtime Rating, ranging from A+ to C, on each of six different metrics including Liquidity, Expenses, Performance, Volatility, Dividends and Concentration; then the fund with the highest average score across all of the metrics is awarded an A+ rating within its respectiveETFdb Category.

IQ Hedge Multi-Strategy Tracker ETF (QAI, A+)

Investors looking to diversify their portfolio with an uncorrelated source of returns ought to consider IndexIQ's QAI as this ETF holds the highest overall score possible in the Hedge Fund ETFdb Category. Investors should note that funds in this category are not awarded dividend or concentration scores given the more dynamic nature of their portfolios. QAI is linked to theIQ Hedge Multi-Strategy Index,which offers broad exposure to a number of hedge fund investmentstyles, including: long/short equity, global macro, market neutral, event-driven, as well as fixed income arbitrage.

QAI presents itself as a viable tool for investors looking to diversify beyond traditional, passive indexing strategies. The underlying strategies employed by QAI should not be expected to generate stellar gains however, instead this ETF may offer a way to improve risk-adjusted returns for buy-and-hold investors over the long-haul.

Cost-consciousinvestors may wish to consider the Credit Suisse Long/Short Liquid Index ETN (CSLS, A-) as this is the cheapest offering in the space. On the other hand, those who prefer relative stability should take a closer look at the IndexIQ Real Return ETF (CPI, A-) as this offering holds the highest possible volatility score in the hedge fund category; in other words, CPI boasts the lowest volatility among competitors in the space.

ETFdb Pro membershave access to Realtime Ratings for all 1,400+ U.S. listed ETPs as well as unlimited data download capabilities across all of thetools,typesand category pages.

Follow me on Twitter@SBojinov

Disclosure: No positions at time of writing.

Related Articles
  1. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  2. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  3. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  4. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  5. Economics

    Can the Market Predict a Recession?

    Is a bear market an indication that a recession is on the horizon?
  6. Budgeting

    The Honest Company Bundles Review: Are They Worth It?

    Learn more about The Honest Company and its bundle subscription services, which deliver discounted diapers, formula and other baby products to your doorstep.
  7. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  8. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  9. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  10. Products and Investments

    The One Thing Your Portfolio Must Always Have

    Portfolio diversification is essential in any situation, but especially so as the market finally returns to fundamentals.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center