IndexIQ, a New York-based developer of quantitative investment strategies, has become the latest provider to introduce a family of products that seeks to replicate the performance characteristics of hedge fund strategies without the high fees typical of the industry.
The HedgeIQ suite of products is based on the firm's proprietary research and development processes to create portfolios of liquid assets tied to equities, bonds, real estate, currencies and commodities that mirror the characteristics and statistically track the returns of specific hedge fund strategies.
The initial range of HedgeIQ products, which replicate long/short equity, emerging markets and other hedge fund strategies, is designed to be used as the basis for investible products for the retail investor, including the high net worth segment. IndexIQ says it is currently evaluating distribution partners for the products.
'For years, the highest quality managers and best performing investment strategies have been nearly exclusive to the institutional and ultra high net worth markets,' says IndexIQ chief executive Adam S. Patti. 'This is especially prevalent in the world of hedge funds, which by definition have been unavailable to the overwhelming majority of investors.
'Our HedgeIQ suite democratises the investment management industry by replicating the characteristics of sophisticated hedge fund strategies in a low-cost, risk managed, easy-to-understand manner.
'Products built around HedgeIQ provide the average investor with access to the strategies employed by the best-performing hedge fund managers, and are important tools in portfolio construction that had until today effectively been off-limits.'
Professor Robert F. Whitelaw, senior advisor and chief investment strategist of IndexIQ, and co-chair of the finance department at New York University's Stern School of Business, says: 'A growing body of academic research shows that passively oriented products can be used to capture a great deal of the potential upside of various hedge fund strategies.
'Since they are not subject to the significant fees associated with traditional hedge funds, these new, robust, well-tested strategies should be of great interest to retail and high net worth investors.'
Based in Rye Brook, New York, IndexIQ is a developer of sophisticated quantitative that underlie investment products for the institutional, high net worth and retail investor markets. Users of the firm's index products include exchange-traded fund sponsors, mutual fund providers and asset managers, institutional investors, plan sponsors, hedge funds and developers of annuities and other investment products.