IndexIQ Launches First ETFs To Introduce Momentum Investing To Fixed Income Markets
IQ Enhanced Core Bond U.S. ETF (AGGE) and IQ Enhanced Core Plus Bond U.S. ETF
(AGGP) are first entries by IndexIQ in the fixed income category
RYE BROOK, New York, May 10, 2016 – IndexIQ, a leading provider of innovative investment solutions, today announced the launch of the first Exchange Traded Funds (ETFs) that introduce a momentum investing approach to fixed income markets: IQ Enhanced Core Bond U.S. ETF (NYSE Arca: AGGE) and IQ Enhanced Core Plus Bond U.S. ETF (NYSE Arca: AGGP).
“Bringing a time proven momentum investing approach to the fixed income space is something that we have researched for some time. We’re pleased for AGGE and AGGP, the first entries by IndexIQ in the fixed income category, to deliver the opportunity for investors to build smarter portfolios by bringing the benefits of smart beta to fixed income,” said Adam Patti, CEO of IndexIQ.
“These new funds allow investors to take a factor-based approach to fixed income investing, providing core exposure across a broad range of fixed income sectors,” added Poul Kristensen, chief economist, portfolio manager and co-head of New York Life’s Strategic Asset Allocation & Solutions (SAS) Group. “By employing a momentum strategy, these funds and their underlying indexes are designed to seek enhanced returns by seeking to capitalize on the persistence of ongoing trends in the market.”
The indexes underlying AGGE and AGGP use a rules-based methodology. AGGE invests in sectors across the U.S. investment grade fixed income market, which includes Treasuries, investment grade corporate bonds and investment grade mortgage-backed securities. AGGE’s Index weights each of the sectors within the investment grade market based on the total return momentum of each fixed-income sector, overweighting those sectors with high momentum and underweighting those with low momentum.
AGGP employs the same investment approach, providing exposures to Treasuries, U.S. investment grade corporates and U.S. investment grade mortgage-backed securities, with the ability to include exposure to U.S. high yield debt and U.S. dollar denominated debt of emerging market issuers.
“Emerging market debt has been a strong performer to start 2016, driven in large part by ongoing dovish Federal Reserve policies, improving emerging market fundamentals and a suddenly weakening dollar,” said Salvatore Bruno, CIO of IndexIQ. “For the ‘core plus’ approach used in AGGP, we felt it was important to have this exposure as one area our index and the fund could access when total return momentum was in the category’s favor.”
IndexIQ, a pioneer in the liquid alternative fund category, has in recent years continued to diversify its product line and AGGE and AGGP are the latest examples of this effort. They join recent ETF product launches that include the IQ Leaders GTAA Tracker ETF (QGTA), which provides exposure to the performance characteristics of the largest mutual funds in the world allocation category, and the first-ever family of 50 percent currency hedged international equity ETFs: IQ 50 Percent Hedged FTSE International ETF (NYSE Arca: HFXI), IQ 50 Percent Hedged FTSE Europe ETF (NYSE Arca: HFXE) and IQ 50 Percent Hedged FTSE Japan ETF (NYSE Arca: HFXJ).
“ETF innovation is something we take very seriously,” added Patti. “With AGGE and AGGP, investors looking to get more from their core bond portfolios have an important new set of tools in their search for yield. We look forward to bringing more ideas and solutions like these to market in the coming months.”
The IndexIQ family of funds also includes:
- IQ Hedge Multi-Strategy Plus Fund (IQHIX – Class I Shares; IQHOX – Class A Shares);
- IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI);
- IQ Hedge Market Neutral Tracker ETF (NYSE Arca: QMN);
- IQ Hedge Macro Tracker ETF (NYSE Arca: MCRO);
- IQ Hedge Long/Short Tracker ETF (NYSE Arca: QLS);
- IQ Hedge Event-Driven Tracker ETF (NYSE Arca: QED); and
- IQ Merger Arbitrage ETF (NYSE Arca: MNA).
- IQ Real Return ETF (NYSE Arca: CPI);
- IQ US Real Estate Small Cap ETF (NYSE Arca: ROOF);
- IQ Global Resources ETF (NYSE Arca: GRES);
- IQ Global Agribusiness Small Cap ETF (NYSE Arca: CROP);
- IQ Global Oil Small Cap ETF (NYSE Arca: IOIL);
- IQ Canada Small Cap ETF (NYSE Arca: CNDA); and,
- IQ Australia Small Cap ETF (NYSE Arca: KROO).
IndexIQ is a pioneer and leading provider of innovative investment solutions focused on absolute return, real assets, international and fixed income strategies. IndexIQ’s solutions are offered as ETFs, mutual funds, separately managed accounts, and ETF model portfolios. The company's philosophy is to democratize investment management by providing all investors with cost-effective access to the types of high-quality, sophisticated investment products that typically have been reserved for institutional and ultra high-net-worth investors. IndexIQ’s mission is to take indexing to the next level by combining the best attributes of both passive and active investing, and make strategies available to investors in low cost, liquid, and transparent products**. IndexIQ is an indirect, wholly-owned subsidiary of New York Life Insurance Company. Additional information about IndexIQ and its products can be found at IQetfs.com.
About Risk (AGGE and AGGP): As with all investments, there are certain risks of investing in the Fund. The Fund’s shares will change in value and you could lose money by investing in the Fund. The Fund’s investment performance, because it is a fund of funds, depends on the investment performance of the ETPs in which it invests.
Funds that invest in bonds are subject to interest rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk which is the possibility that the bond issuer may fail to pay interest and principal in a timely manner.
The principal risk of mortgage-backed securities is that the underlying debt may be prepaid ahead of schedule if interest rates fall, thereby reducing the value of the Fund’s investment. If interest rates rise, less of the debt may be prepaid and the Fund may lose money.
The value of the Fund’s investment in ETPs is based on stock market prices and the Fund could lose money due to stock market developments, the failure of an active trading market to develop, or exchange trading halts or de-listings.
Securities of issuers based in countries with developing economies (emerging markets) may present market, credit, liquidity, legal, political and other risks different from, or greater than, the risks of investing in developed foreign countries. Emerging markets are subject to greater market volatility than more developed markets.
High yield securities have speculative characteristics and present a greater risk of loss than higher quality debt securities. These securities can also be subject to greater price volatility. As a new fund, there can be no assurance that it will grow to or maintain an economically viable size, in which case it may experience greater tracking error to its Underlying Index than it otherwise would at higher asset levels, or it could ultimately liquidate.
Consider the Funds’ investment objectives, risks, and charges and expenses carefully before investing. The prospectus and the statement of additional information include this and other relevant information about the Funds and are available by visiting IQetfs.com or calling 888-934-0777. Read the prospectus carefully before investing.
IndexIQ® is the indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC. ALPS Distributors, Inc. (ALPS) is the principal underwriter of the ETFs. NYLIFE Distributors LLC is a distributor of the ETFs and the principal underwriter of the IQ Hedge Multi-Strategy Plus Fund. NYLIFE Distributors LLC is located at 169 Lackawanna Ave, Parsippany, NJ 07054. ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC.
**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.
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 IQ Hedge Multi-Strategy Plus Fund (IQ Fund), the IQ Hedge Multi-Strategy Tracker ETF (IQ Multi-Strategy ETF), the IQ Hedge Market Neutral Tracker ETF (QMN ETF), the IQ Hedge Long/Short Tracker ETF (QLS ETF), the IQ Hedge Event-Driven Tracker ETF (QED ETF), and the IQ Macro Tracker ETF (IQ Macro ETF) are not hedge funds and do not invest in hedge funds. The IQ Hedge-Multi Strategy Plus 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 QMN ETF, the IQ Macro ETF, the QLS ETF, the QED ETF, 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.
Liquid alternatives are alternative investment strategies that are available through vehicles that provide daily liquidity, such as mutual funds and ETFs.