IndexIQ, a leading developer of index-based, liquid alternative investment solutions, announced today that two of its Exchange-Traded Funds (ETFs) have marked their third anniversaries on October 27, 2012: the IQ Global Resources ETF (NYSE Arca: GRES) and the IQ Real Return ETF (NYSE Arca: CPI).
GRES was introduced on October 27, 2009 and is the broadest commodities and natural resources ETF, including: livestock; precious metals; grains, food and fiber; energy; industrial metals; plus timber, water, and coal. GRES is based on an index with over 5 years of live history, designed to reweight its allocations to individual commodity sectors monthly with a goal to “buy low and sell high.” The fund is diversified both geographically and by sector. This unique and market proven methodology has made GRES among the highest performing ETFs in the commodities and natural resources category during its three-year live history, as well as exhibiting among the lowest levels of volatility in its class.
From inception through its three-year anniversary, GRES performed as follows:
|As of 10/27/12||As of 9/30/12|
|IQ Global Resources ETF (GRES)|
|IQ Global Resources Index (IQGREST)|
|S&P North American Natural Resources Sector Index|
|Dow Jones-UBS Commodity Index|
Fund inception date is October 27, 2009. Performance data shown represents past performance and is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. Fund returns reflect dividends and capital gains distributions. GRES has an expense ratio of 0.75%. Fund performance current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.IndexIQ.com.
“We designed GRES to provide exposure to the full spectrum of the commodity universe and it remains the broadest commodity ETF available to investors today,” said IndexIQ CEO Adam Patti. “It is also the only broad-based commodity equity ETF to provide exposure to Timber, Water and Coal. We designed GRES to help solve what we believe to be significant structural issues of other leading commodity products, including the deleterious effects of contango and backwardation, the issuance of K-1s for the derivative-based ETFs, the significant overweight of energy inherent in many of the other competing products, and the high correlation to broad equities and high volatility that the equity-based commodity products exhibit. GRES has accomplished all of these goals through in its 3-year track-record, as well as the 5-year track-record of its underlying index.”
CPI also began trading on October 27, 2009 and is based on an index designed to provide investors with a hedge against the U.S. inflation rate by providing a “real return,” or return above the rate of inflation, as represented by the Consumer Price Index (“CPI”). CPI provides exposure to 12 asset classes, including broad commodities, gold, oil, U.S. government short-, intermediate-, and long-term maturity obligations; U.S. real estate; foreign currencies and currency futures; foreign equity; and U.S. large and small cap equity. Investors have gravitated to CPI for use as an alternative to long-term cash holdings or in lieu of other short-term fixed income holdings.
From inception through its three-year anniversary, CPI performed as follows:
|As of 10/27/12||As of 9/30/12|
|IQ Real Return ETF (CPI)|
|IQ Real Return Index (IQHGCPIT)|
|Barclays Capital U.S. Short Treasury Bond Index|
Fund inception date is October 27, 2009. Performance data shown represents past performance and is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. Fund returns reflect dividends and capital gains distributions. CPI has an expense ratio: 0.48% and total annual fund operating expenses of 0.71%. Fund performance current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.IndexIQ.com.
“CPI was created in part as an alternative to Treasury Inflation Protected Securities (TIPS), which we believe to be an insufficient hedge against inflation,” said Patti. “Our research has shown that a multi-asset approach to inflation hedging tends to be more effective than the exposure offered by TIPS and we’re pleased with the track record that CPI has been able to develop over the last three years. CPI has accomplished its goal of providing approximately 2-3% return above that of short term fixed income, with a consistent volatility profile of approximately 2%.”
Both GRES and CPI were the first ETFs of their kind at the time they were introduced and were designed to address serious limitations which IndexIQ believes to exist in other products, namely the issues with TIPS cited above and in the case of GRES, providing exposure to markets IndexIQ believes would benefit from growing demand for commodities, and to act as an alternative to energy-heavy commodity ETFs, while avoiding the complexities of direct commodity ownership through derivatives.
“GRES and CPI were designed from the start to provide investors with exposure to specific segments of the market that we believed were not being adequately addressed at the time the funds were launched,” said Adam S. Patti, Chief Executive Officer at IndexIQ. “We are pleased to note on this third anniversary that both funds have performed as we had hoped they would, and that both have posted returns that exceed their respective benchmarks over the three-year period.”
Since its founding in 2006, IndexIQ has been an innovator in the development and application of index-based, liquid alternative investment solutions. IndexIQ has launched a number of first-of-their-kind products, and has emerged as a leader in the “hedge-style” ETF category by assets under management (AUM). Its IQ Hedge Multi-Strategy Tracker ETF (QAI) is the largest “hedge-style” ETF in the market by assets. Other funds launched by IndexIQ in the alternatives space include:
- IQ Alpha Hedge Strategy Fund (IQHIX – Institutional Share Class; IQHOX – Investor Share Class), designed to be a core portfolio holding in the alternative category, and the first open-end, no-load hedge fund replication mutual fund;
- IQ Hedge Market Neutral Tracker ETF (NYSE Arca: QMN), designed to replicate the performance of the Market Neutral segment of the hedge fund universe;
- IQ Hedge Macro Tracker ETF (NYSE Arca: MCRO), designed as an equity alternative, and the first Global Macro hedge fund replication ETF; and
- IQ Merger Arbitrage ETF (NYSE Arca: MNA), designed as an equity alternative, and the first merger arbitrage ETF;
IndexIQ also has developed ETFs focused on providing real asset exposure, including:
- IQ US Real Estate Small Cap ETF (NYSE Arca: ROOF), the first US Real Estate Small Cap ETF;
- IQ Global Agribusiness Small Cap ETF (NYSE Arca: CROP), the first agribusiness small cap ETF;
- IQ Global Oil Small Cap ETF (NYSE Arca: IOIL), the first global oil small cap ETF;
The firm’s international investment strategies include:
- IQ Canada Small Cap ETF (NYSE Arca: CNDA), the first Canada small cap ETF;
- IQ Australia Small Cap ETF (NYSE Arca: KROO), the first Australia small cap ETF; and
- IQ Emerging Markets Mid Cap ETF (NYSE Arca: EMER), the first Emerging Markets mid cap ETF.
IndexIQ is a leading issuer of index-based liquid alternative solutions focused on absolute return, real asset and international strategies. IndexIQ solutions are offered as ETFs, Mutual Funds & Separate Accounts. IndexIQ’s philosophy is to democratize investment management by making innovative alternative investment strategies available to investors in low cost, liquid and transparent products.* IndexIQ strategies are marketed through the company’s proprietary investment products and select partnerships with leading global financial institutions. Additional information about the company and its products can be found at www.IndexIQ.com.
*IndexIQ’s ETF holdings are available daily on IndexIQ’s website. Brokerage commissions apply to ETFs. ETFs are liquid in that they are exchange-traded.
Investors in GRES do not receive K-1s for tax reporting purposes, as do investors in other commodities and natural resources investments. GRES distributes a single Form 1099 to its shareholders. Contango (backwardation) occurs when the futures price is above (below) the expected future spot price, resulting in the price declining (rising) to the spot price before the delivery date.
Index performance does not reflect charges and expenses associated with the Funds or brokerage commissions associated with buying and selling ETF shares. One cannot invest directly in an index. The S&P North American Natural Resources Sector Index measures the performance of U.S.-traded natural resource related stocks. The Dow Jones-UBS Commodity Index is composed of futures contracts on physical commodities traded on U.S. exchanges, with the exception of aluminum, nickel and zinc, which trade on the London Metal Exchange (LME). The Barclays Capital U.S. Short Treasury Bond Index measures the performance of U.S. Treasury securities that have a remaining maturity between one and twelve months.
The IQ Alpha Hedge Strategy Fund (IQ Fund), the IQ Hedge Multi-Strategy Tracker ETF (IQ Multi-Strategy ETF), the IQ Hedge Macro Tracker ETF (IQ Macro ETF), and the IQ Hedge Market Neutral Tracker ETF (QMN) are not hedge funds and do not invest in hedge funds. The IQ Alpha Hedge Strategy Fund is a registered open-end mutual fund that invests in exchange-traded funds (ETFs) and similar securities in an attempt to replicate the performance characteristics of certain hedge fund investing styles, but with less cost, more liquidity, and greater portfolio transparency than traditional hedge funds. There can be no assurance that the Funds’ investment strategies will be successful. The investment performance of the IQ Multi-Strategy ETF, the IQ Macro ETF, QMN, and the IQ Real Return ETF (collectively, the IQ ETFs), because they are funds of funds, depends on the investment performance of the underlying ETFs in which they invest. There is no guarantee that the IQ ETFs themselves, or each of the underlying ETFs in the Funds’ portfolios, will perform exactly as its underlying index. The IQ ETFs are non-diversified and susceptible to greater losses if a single portfolio investment declines than would a diversified mutual fund. The IQ ETFs’ underlying ETFs invest in: foreign securities, which subject them to risk of loss not typically associated with domestic markets, such as currency fluctuations and political uncertainty; commodities markets, which subject them to greater volatility than investments in traditional securities, such as stocks and bonds; and fixed income securities, which subject them to credit risk; the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt; and interest rate risk; changes in the value of a fixed-income security resulting from changes in interest rates. Leverage, including borrowing, will cause some of the IQ ETF’s underlying ETFs to be more volatile than if the underlying ETFs had not been leveraged. QMN is new and has limited operating history.
Investors are reminded that all investing involves risk, including possible loss of principal. Consider the Funds’ investment objectives, risks, charges and expenses carefully before investing. A prospectus with this and other information about the Funds may be obtained by visiting www.indexiq.com or by calling (888) 934-0777. Read the prospectus carefully before investing.
IndexIQ ETFs and mutual funds are distributed by ALPS Distributors, Inc., which is not affiliated with IndexIQ.