Download Hedge against Rising Interest Rates with QAI

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by MainStay Investments
December 31, 2016
Hedge against Rising Interest Rates with QAI
QAI: IQ Hedge Multi-Strategy Tracker ETF
QAI seeks 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.
In addition to providing exposure to hedge fund strategies through a
liquid, transparent structure, QAI may also serve as a hedge for your
portfolio during rising rate environments as the Fund’s historical low
correlation to bonds has resulted in outperformance during rising
rate environments.
The chart below displays periods of rising rates, as measured by
the 10-year U.S. Treasury yield, and performance for QAI and the
Barclays U.S. Aggregate Bond Index during these periods. Since
its inception, QAI has outperformed the Bloomberg Barclays U.S.
Aggregate Bond Index during all 13 rising rate periods, ranging
from 54 bps during Period 3 to 485 bps during Period 1. Based
on IndexIQ’s proprietary rules-based process, QAI rebalances
exposures across the broad hedge fund strategies to respond
to the changing dynamics of the market.
QAI has outperformed bonds during all rising rate periods since its inception
160
6%
4.42%
140
4
2.68%
120
1.75%
100
0.90%
-0.30%
0
-0.43%
-0.48%
-0.36%
-2.48%
-2
-1.68%
-1.18%
-0.69%
-1.52%
-0.95%
-1.98%
-1.07%
-1.91%
-3.08%
-4
40
-2.47%
-4.87%
Interest Rate Increase (bps)
QAI NAV Return
20
Period 13
11/4/16 - 12/15/16
Period 12
4/17/15 - 7/13/15
Period 11
1/30/15 - 3/6/15
0
Period 10
10/23/13 - 12/31/13
Period 8
11/16/12 - 1/30/13
Period 7
7/24/12 - 9/14/12
Period 6
1/31/12 - 3/19/12
Period 5
9/22/11 - 10/27/11
Period 4
10/11/10 - 2/10/11
Period 3
11/30/09 - 4/6/10
Period 2
7/13/09 - 8/7/09
Period 1
4/1/09 - 6/10/09
-6
80
60
-3.36%
Period 9
5/2/13 - 9/5/13
Return
1.32%
0.69%
0.36%
0.18%
Interest Rate Increase
(basis points)
2.24%
2
Bloomberg Barclays U.S. Aggregate Bond Index Return
Sources: FactSet, IndexIQ. Past performance is no guarantee of future results, which will vary. There may have been other time periods where QAI underperformed the index. Bonds represented
by the Barclays U.S. Aggregate Bond Index. It is not possible to invest directly in an index. Treasurys are backed by the full faith and security of the U.S. Government as to the timely payment of
principal and interest when held to maturity. Rising interest rates as identified by 40+ bps moves in 10 Year U.S. Treasury Yields.
QAI Features and Benefits*
QAI does not invest in hedge funds, and the Index it tracks (IQ Hedge Multi-Strategy Index) does not include hedge funds as components.
Here are a few additional features:
n
Seeks performance similar to the overall hedge fund universe
n
First mover in the space with 6+ year live track record
n
Seeks low correlation to the equity market
n
Intra-day liquidity
n
Tax-efficient—historically has not paid out short term capital gains
n
Portfolio transparency—holdings available daily
n
No manager-specific risk—Fund tracks a rules-based index1
*The nature of the IQ Hedge products allows for these potential benefits, which typically are not associated with traditional hedge funds.
About IndexIQ
IndexIQ is a leading issuer of liquid alternative investment solutions
focused on absolute return, real asset, and global/international
strategies. IndexIQ’s solutions are offered as ETFs, mutual funds,
separately managed accounts, and ETF model portfolios. IndexIQ’s
philosophy is to democratize investment management by making
innovative alternative investment strategies available to investors
in low cost, liquid, and transparent products.2
Performance
as of 12/31/2016
1 year
3 years
5 years
QAI (NAV)
0.68%
0.29%
2.00%
QAI (Market Price)
0.71
0.25
1.99
Since Inception
Expense Ratio
2.81% (3/25/09)
0.96%
2.81 (3/25/09)
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Total Returns are calculated using the daily 4:00 pm ET net
asset value (NAV). The price used to calculate market return (“MP”) is determined by using the closing price listed on the NYSE Arca and does not represent returns
an investor would receive if shares were traded at other times.
The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return
and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost.
Current performance may be lower or higher than performance data quoted. Fund returns reflect dividends and capital gains distributions.
Fund performance current to the most recent month-end is available by calling 888-934-0777 or by visiting IQetfs.com.
For more information
888-934-0777
IQetfs.com
About Risk
There are risks involved with investing in any such products, including the possible loss of principal. Investors in the Funds should be willing
to accept a high degree of volatility and the possibility of significant losses.
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.
There can be no guarantee that investment objectives will be met.
1. The Fund employs a “passive management”—or indexing—investment approach designed to track the performance of the Index. The Fund invests primarily in
the Index components that comprise the Index.
2. Ordinary brokerage commissions apply. IndexIQ’s ETF holdings are available daily on IndexIQ’s web site. ETFs are liquid in that they are exchange traded.
The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based index that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond
market, including Treasurys, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage passthroughs), asset-backed securities, and commercial mortgage-backed securities, with maturities of at least one year.
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.
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. NYLIFE
Distributors LLC is a distributor of the ETFs and the principal underwriter of the IQ 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. NYLIFE Distributors LLC is a Member FINRA/SIPC.
Not FDIC/NCUA Insured
1649988
ME091-16
Not a Deposit
May Lose Value
No Bank Guarantee
Not Insured by Any Government Agency
MEQAI02a-01/17