IndexIQ offers retailer investors fund-style investing no-load mutual fund. Index manager IndexIQ has launched a no-load, open-end mutual fund to replicate a range of hedge-fund investing strategies. It's meant to deliver hedge fund-like performance in a low cost, transparent, and highly liquid investment vehicle.

"High-net-worth requirements and regulatory restrictions, among other factors, have essentially limited participation to wealthy individuals and institutions," says IndexIQ's CEO Adam Patti. "The IQ Alpha Hedge Strategy Fund opens up hedge fund-style investing by providing access to hedge fund performance in an open-end mutual fund."

Another way

The new fund is rooted in IndexIQ's view that "alternative beta" -- returns due to varying exposure to different asset classes -- is the primary driver of aggregate long-term hedge fund portfolio performance.

Rye Brook, N.Y.-based IndexIQ first "captures" this beta in its IQ Alpha Hedge index, which uses proprietary algorithms to closely replicate the returns of six top hedge-fund strategies. Alpha is then sought by optimizing the relative index weights among the six hedge-fund strategies.

"There is a significant body of academic research that supports the ability of hedge-fund replication strategies to capture the characteristics of broad-based hedge-fund returns -- without the associated costs and risks of investing directly in the underlying strategies," says Robert Whitelaw, IndexIQ's chief investment strategist and chairman of the Finance Department at New York University's Stern School of Business. "The IQ Alpha Hedge Strategy Fund employs the latest research and modeling techniques to provide access to these strategies in a low-cost, open-end investment vehicle." -FWR

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