Developer seeks to identify value companies poised for outperform the mkt. Index manager IndexIQ is out with a new index family that seeks to identify value-priced companies that are positioning themselves to outperform the market by investing aggressively for the future now.

"Low multiples alone do not make a stock attractive," says Adam Patti, CEO of IndexIQ. "To avoid the classic value trap, we have focused our research on identifying those companies that we believe not only hold good intrinsic value, but that are taking steps to unlock that value by investing capital to support future growth."

Demand

IndexIQ's "Active Value" methodology is based on a proprietary process that attempts "to capture the essence of a value investing strategy in a passively managed, tax efficient index product," according to a company press release.

The new family of indexes is designed to identify attractively-priced equities using traditional value stock selection screens, with a focus on eligible companies that are most innovative and that invest significantly in new products and services designed to foster future growth. The index family includes a full range of market capitalizations, including all-cap, large-cap and small-cap for U.S., global and international markets.

For now IndexIQ's indexes are available only through third-party distributors. For instance, Claymore Advisors, an affiliate of Lisle, Ill.-based Claymore Securities, has licensed the rights to the IndexIQ's Active Value small-cap index, which it plans to make part of its "Claymore/IndexIQ Small-Cap Value" exchange-traded fund program.

But Patti says that Rye, N.Y.-based IndexIQ plans to market ETFs directly to advisors. "We've had a tremendous response from [registered investment advisors (RIAs)]," he says. "Many RIAs who run money in one or two strategies realize that clients are looking for more and so they want full turnkey access to other strategies."

Specifically, adds Patti, some high-net-worth investors want exposure to high-performing niche indexes that add alpha while retaining "the best characteristics of indexing," such as tax efficiency and low costs. -FWR

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