Guide To ETF Providers: IndexIQ

IndexIQ is an asset management firm founded in 2006. It offers both mutual funds and ETFs. IndexIQ was the first to offer hedge fund replication ETFs that cover popular ledge fund investment styles. For example, the IQ Hedge Multi-Strategy Tracker ETF (ARCA:QAI) attempts to replicate the risk-adjusted return characteristics of hedge funds using a variety of hedge fund investment styles such as long/short equity, global macro, market neutral, event-driven, fixed-income arbitrage and emerging markets.

In addition to hedge fund replication, IndexIQ offers a variety of Index constructions including alternatively weighted indexes, tactical rotation indexes and intangible asset value index strategies.

IndexIQ defines itself and is guided by its Rules-Based Alpha philosophy, which integrates traditional index investing with the alpha potential sought by active managers. The philosophy is based on three principles:

• Democratizing alternatives – providing investors access to alternative investment products that are typically reserved for institutional and ultra-high net worth individuals;
  
  
• Alpha/Beta separation – offering investors access to alpha and beta sources typically reserved for institutional investors and
  
  
• Third-generation indexing – the combination of rules-based construction, low cost and tax efficiency of traditional index investing with the alpha potential that active managers seek.

IndexIQ is headquartered in Rye Brook, NY, and currently has 11 U.S. listed ETFs. ETF expense ratios range between 0.48 and 0.75%, with an average expense ratio of 0.71%.

Figure 5: IndexIQ\'s top five largest funds by AUM. Information current as of Feb. 8, 2013.