Download Isolate Returns from Broad Market Influences

Q2 2017
IQ Merger Arbitrage ETF (MNA)
Isolate returns from broad market influences…
A merger arbitrage strategy seeks to profit from the discrepancy between the acquisition price and the price at which the
company’s stock trades before the consummation of a merger. Historically, merger arbitrage strategies have provided
diversification and stable returns across various market environments.
The goal of a merger arbitrage
strategy is to provide more
consistent returns and possibly
deliver a smoother return path for
investors. A merger arbitrage
strategy can also serve as an
important capital preservation tool
and provide drawdown protection
in tumultuous markets.
Rolling 12-Month Returns
Return
1
Seek smooth & consistent
returns through varying
market environments
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
Drawdown
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
IQ Merger Arbitrage Index
S&P 500 Index
Source: FactSet, as of 12/31/16. IQ Merger Arbitrage Index seeks to achieve capital appreciation by investing in global companies for
which there has been a public announcement of a takeover by an acquirer. The S&P 500 is a stock market index based on the market
capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. Past performance is not a guarantee
of future results. It is not possible to invest directly in an index.
2
Build more efficient
portfolios and reduce risk
An allocation to a merger arbitrage
strategy can improve the
risk/return profile of a traditional
portfolio. The driver of returns for
merger arbitrage strategies is
isolated from broader markets, so
the performance of such a strategy
is not expected to be highly
correlated to other asset classes
over time. In addition, merger
arbitrage strategies have
significantly lower beta sensitivity
to the broader market.
12.00
1.20
1.60
1.40
10.00
1.00
1.20
8.00
0.80
1.00
0.80
6.00
0.60
0.60
4.00
0.40
0.40
2.00
0.20
0.20
0.00
0.00
0.00
Sharpe Ratio
Standard Deviation
Beta
Correlation of IQ Merger Arbitrage Index to:
S&P 500
0.40
Bl oomber g B ar clay s US Aggr egat e -0.08
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
Source: FactSet, as of 12/31/16. Standard deviation is the measure of the dispersion of a set of data from its mean. Sharpe ratio is the average
return earned in excess of the risk-free rate per unit of volatility or total risk. Beta is the measure of volatility of a security or portfolio in
comparison to the market as a whole. Correlation is a statistic used to measure how two securities move in relation to each other. Past
performance is not a guarantee of future results. It is not possible to invest directly in an index.
Smart solutions for building better portfolios
IQetfs.com
A mechanical, rules-based
approach to merger arbitrage
$45
Merger arbitrage is a hedged,
alternative investment strategy that is
designed to take advantage of price
discrepancies that exist for
companies involved in a merger. If
successful, a merger arbitrage
strategy can benefit by purchasing
companies at prices below the target
price and locking in the difference
(spread). Targeting this spread seeks
to deliver returns that are immune
from fluctuations of the broader
market.
$40
De a l Fina lize d
$35
$42
St ra t e gy Purchase Price
$35
$30
$25
$20
1/1/2…
12/1/…
11/1/…
10/1/…
9/1/2…
8/1/2…
Time
7/1/2…
6/1/2…
5/1/2…
4/1/2…
3/1/2…
2/1/2…
1/1/2…
12/1/…
$15
A cquisit ion A nnounce d
11/1/…
Stock Price
3
Source: The above is for illustrative purposes only, based on hypothetical events of an actual merger and acquisition.
Consider a disciplined, rules-based approach to remove manager subjectivity…
IQ Merger Arbitrage ETF (MNA)
Broad Access
Identifies merger arbitrage
opportunities from developed
countries across all industry
sectors.
Tax Efficiency
Merger arbitrage is a
potentially high turnover
strategy that can be very tax
inefficient in a mutual fund or
limited partnership structure.
An ETF provides a more taxefficient structure for this type
of strategy.
Track Record
With an inception date in
2009, MNA has the longest
track record and largest asset
base of any merger-related
ETF on the market.
About risk
All investments are subject to risk and will fluctuate in value. All ETFs are subject to market risk, including possible loss of principal. Certain of the proposed takeover
transactions in which the Fund invests may be renegotiated, terminated, or involve a longer time frame than originally contemplated, which may negatively impact the Fund’s
returns. The Fund’s investment strategy may result in a high portfolio turnover, which, in turn, may result in increased transaction costs to the Fund and lower total returns.
The Fund is susceptible to foreign securities risk – since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets,
including currency transaction risk. Diversification does not eliminate the risk of experiencing investment losses. Stock prices of mid-and small-capitalization companies
generally are more volatile than those of larger companies and also more vulnerable than those of larger-capitalization companies to adverse economic developments. The
Fund is non-diversified and is susceptible to greater losses if a single portfolio investment declines than would a diversified fund. The ETF should be considered a speculative
investment with a high degree of risk, does not represent a complete investment program, and is not suitable for all investors.
The S&P 500 is an American stock market index based on the market capitalization of 500 large companies having common stock listed on the NYSE or NASDAQ.
Exposure to an asset class represented by an index is available through investable instruments based on that index. A decision to invest in any such investment fund should
not be made in reliance on any of the statements set forth in this document. Prospective investors are advised to carefully consider the risks associated with investing in such
funds, as detailed in the prospectus, before making an investment in any such fund.
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 888-474-7725. Read the prospectus
carefully before investing.
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 a distributor
of the ETFs and the principal underwriter of the IQ Hedge Multi-Strategy Plus Fund. NYLIFE Distributors LLC is located at 30 Hudson Street, Jersey City, NJ 07302. ALPS
Distributors, Inc. is not affiliated with NYLIFE Distributors LLC is a member FINRA/SIPC.
1732715
MEMNA02a-04/17