MARKET UPDATE
MARCH 31 | 2016
SOLUTIONS
TO CONSIDER
 The Wall Street Journal reported in the March 31 article titled, “An Exodus
From Hedge Funds” that some institutional managers are questioning the
value derived from the traditional hedge fund investments they’ve made.
 According to the article, a number of managers are switching to lower cost
hedge fund imitations, but the asset class still accounts for 8.62% of the
portfolios at Foundations and Endowments as of December 31, 2015 (citing
Wilshire).
QAI
IQ Hedge Multi-Strategy
Tracker ETF
 On average, the nation’s largest wealth managers are recommending a
9% portfolio allocation to hedge funds for their clients, as they can play an
important diversification role in a portfolio, including stocks and bonds
(Figure 1).
QMN
IQ Hedge Market Neutral
Tracker ETF
Figure 1: Average Asset Allocation at 40 Top Wealth Managers (%)
Equities
U.S.
Developed
Emerging
Cash
50.7
31.5
14.9
4.4
3.0
Fixed Income
U.S.
High Grade
High Yield
Developed
Emerging
28.7
26.6
22.6
4.0
1.3
0.8
Alternatives
Real Estate
Commodities
Hedge Funds
Private Equity
Other
17.6
2.6
1.0
9.0
3.8
1.4
MCRO
IQ Hedge Macro Tracker ETF
QED
IQ Hedge Event-Driven Tracker ETF
QLS
IQ Hedge Long/Short Tracker ETF
Source: Barron’s Penta. March 28, 2016. Note: Asset allocations are models; all firms customize to suit client's needs.
Numbers may not add up to 100% due to rounding.
A Simple but Not Simple-Minded Approach
There are multiple ways investors can attempt to imitate the exposures that
hedge funds can provide. IQ Hedge Multi-Strategy Tracker ETF (QAI) is one and
was named the 2016 “Best Liquid Alternative Fund” by Hedgeweek. QAI has a
7-year live track record and more than $1 billion in assets. It is designed to
replicate the risk-adjusted return characteristics of hedge funds using multiple
hedge fund investment styles, including long/short equity, global macro,
market neutral, event-driven, fixed income arbitrage, and emerging markets.
QAI offers the benefits of an exchange-traded fund (ETF) structure, including
lower fees than traditional hedge funds (fact sheet). A comparison of QAI’s
underlying index, IQ Hedge Multi-Strategy Index, to the HFRI Fund of Funds
Composite Index shows a similar risk/return profile since September 2008
(Figure 2).
Check out IndexIQ’s latest
blogs, including
Will Hedge Funds Make a
Comeback in 2016?
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updates from MainStay and
IndexIQ, visit
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Hedgeweek Award Methodology: Awards are based
on a “peer review system” whereby Hedgeweek’s
readers—including institutional and high net worth
investors, managers and other industry professionals at
fund administrators, prime brokers, custodians and
advisers—are invited to elect a “best in class” in a
series of categories via an online survey. For more
information, visit hedgeweek.com/hedgeweek/awards/
methodology.
Multi-Boutique Investments | Long-Term Perspective
12% | Thought Leadership
Annualized return
Return
Annualized
return
Annualized
Annualized return
Annualized return
12%
10%
10%
Figure 2: Performance History—Index Risk/Return
8% Profile
8%
9/30/2008—12/30/2015
6%
6%
4%
12%
4%
IQ Hedge Multi-Strategy Index
2%
12%
10%
2%
HFRI Fund of Funds Composite Index
0%
10%
8%
0%
5%
10%
15%
20%
25%
0%
0%
5% S&P500
10%Index 15%
20%
25%
Annualized
volatility
8%
6%
4%
2%
0%
0%
5%
Annualized volatility
IQ Hedge MS Index
6%
HFRI FoF Composite Index
IQ Hedge MS Index
S&P 500® Index
HFRI FoF Composite Index
S&P 500® Index
4%
2%
15%
20%
0%
AnnualizedVolatility
volatility
Annualized
0%
5%
10%
IQ Hedge MS Index
30%
30%
HFRI FoF Composite Index
25%
30%
10%
15%
20%
25%
30%
S&P 500® Index
Annualized volatility
Source: IndexIQ, FactSet, Bloomberg. Index performance is for illustrative purposes only and does not represent actual fund performance. The IQ Hedge MultiStrategy Index attempts to replicate the risk-adjusted return characteristics
multipleIndex
hedge fund investment
styles. The HFRI Fund of Funds
IQ Hedge MS Indexof hedge funds
HFRIusing
FoF Composite
S&P 500® Index
Composite Index is an equally weighted hedge fund index including over 650 domestic and off-shore fund of funds. The S&P 500® Index is an unmanaged index
considered representative of the U.S. stock market. Past performance is no guarantee of future results, which will vary. It is not possible to invest directly
in an index.
About Risk
All investments are subject to risk and will fluctuate in value. Alternative investments are speculative, not suitable for all clients, and intended for
experienced and sophisticated investors who are willing to bear the high economic risks of the investment. All ETFs are subject to market risk,
including possible loss of principal. Liquid alternatives are alternative investment strategies that are available through vehicles that provide daily
liquidity, such as mutual funds and ETFs.
The Fund's investment performance, because it is a fund of funds, depends on the investment performance of the underlying ETFs in which it
invests. There is no guarantee that the Fund itself, or any of the ETFs in the Fund's portfolio, will perform exactly as its underlying index. The
Fund’s 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 Fund’s underlying ETFs to be more
volatile than if the underlying ETFs had not been leveraged.
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.
For more information
888-934-0777
IQetfs.com
MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay
Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services.
IndexIQ® is an indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC. ALPS Distributors, Inc. (ALPS) is the
principal underwriter of the ETFs and NYLIFE Distributors LLC is the distributor of the ETFs and IQ Hedge Multi-Strategy Plus Fund. NYLIFE
Distributors LLC is located at 169 Lackawanna Ave, Parsippany, NJ 07054 (effective April 1, 2016, the address will be 30 Hudson Street, Jersey City,
NJ 07302). ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC.
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