Hedge Fund ETF

Index IQ came out with their first Hedge Fund ETF last week. A lot of press has been surrounding this ETF in the industry. The ETF, the IQ Hedge Fund Multi-Strategy Tracker ETF, ticker symbol QAI, has an expense ratio of .75%.  Below is the fund’s strategy.

The IQ Hedge Multi-Strategy Tracker ETF seeks to track, before fees and expenses, the performance of the IQ Hedge Multi-Strategy Index. The Index attempts to replicate the risk-adjusted return characteristics of the collective hedge funds using various hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets.

Why this is important?

This hedge fund ETF is a game changer because unlike other ETFs that merely track completely passive indexes or use a very simple systematic approach to choosing index constitutes, this ETF, through its index, is a hedge fund, using the strategies of hedge funds that have been around for some time. Technically, the ETF replicates hedge fund strategies. The hedge fund index does not track hedge fund performance, (this would be difficult because of liquidity issues) but it replicates performance through replicating strategies.

Now, through this ETF, all investors can gain the benefit of hedge fund strategies.

Hedge Fund ETF Strategies

Using the hedge fund strategies already mentioned like Long/Short and event driven, QAI uses ETFs as its investment vehicle to implement these strategies. QAI is a Hedge Fund of ETFs.

Costs

QAI having an expense ratio of .75% seems high compared to other passively managed ETFs. However, .75% is a low cost for any mutual fund that actively manages any asset class. Compared to other hedge funds, .75% seems like nothing. The traditional hedge fund fee structure 2 and 20 means that the hedge fund charges 2% of all assets and 20% of all profits. That in itself makes beating benchmarks a high hurdle.

Recent posts

  • i bonds
  • Pros and Cons of Dividend Investing
By Published On: March 29, 2009

Share This Story, Choose Your Platform!

Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment advisor with the U.S. Securities and Exchange Commission (SEC). As a registered investment advisor, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment advisor’s registration.

Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.

To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.

Sign up for our newsletter!

Our latest blogs, podcasts, and educational videos delivered to your inbox weekly.