The fund, which touts an expense ratio of 0.75% along with $1.1 billion in AUM, recently traded as high as $29.44 on an intraday basis in late September. But QAI traded as low as $28.45 as recently as Monday of this week before rebounding slightly to current levels.
This move downward brings the ETF back to where it was trading at in March of this year. In spite of the recent sell-off, however, QAI still holds a 3-star Morningstar ranking and has attracted a net $32 million in new assets via creation year-to-date.
As we mentioned earlier, QAI is the largest “Alternatives” based ETF in the marketplace by a huge margin, ahead of the $179 million WDTI (WisdomTree Managed Futures Strategy, Expense Ratio 0.95%).
IQ, or IndexIQ, which is now part of New York Life Investments, is the fund sponsor behind QAI. The fund debuted back in March of 2009 and this tenure has certainly helped to make the fund the largest “Hedge Fund” like and “Alternatives” based ETF in the U.S. listed landscape. When we delve through fund literature we see that “Hedgeweek” awarded QAI the “Best Liquid Alternative Fund” in 2016 in fact.
From a fund methodology standpoint we see the following rhetoric:
“The Index (IQ Hedge Multi-Strategy Index) attempts to replicate the risk-adjusted return characteristics of hedge funds using various hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, and emerging markets.”
Investment advisory firms, or institutions who have invested in hedge funds for clients or their respective investment portfolios in hedge funds on a one-off basis, are likely familiar to both high fees as well as “lock-up” periods occurring with some hedge funds where the investor often cannot redeem their shares for instant liquidity and their money back. QAI has certainly found appeal by covering both of the following in terms of offering “Hedge Fund” like strategies within the ETF wrapper itself, and of course the fund functions like any ETF in offering not only daily, but intra-day liquidity.
QAI’s recent performance stutter-step likely conjoins with Hedge Funds themselves where many have been over-exposed to Emerging Markets, which have been hammered recently, especially post U.S. Presidential election. Fund flows however suggest to us that holders of QAI are not panicking, as we have not seen redemption pressure within the fund.
QAI shares fell $0.01 (-0.04%) to $28.55 in Wednesday afternoon trading. Year-to-date, QAI has gained a paltry 0.32%, versus a 6.76% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.