MutualFundWire.com: IndexIQ Unleashes an Agricultural ETF
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Monday, March 21, 2011
IndexIQ Unleashes an Agricultural ETF
IndexIQ is about to launch another new exchange-traded fund, its first
focused on agriculture. Today the Rye Brook, New York-based alternatives manager
confirmed that the IQ Global Agribusiness Small Cap ETF will begin
trading tomorrow on the NYSE Arca, tracking the IQ Global Agribusiness
Small Cap Index.
Adam Patti, CEO of IndexIQ, puts the launch in the context of volatile food
prices. (According to IndexIQ, the 3.9 percent rise in food prices in February
was the biggest monthly jump since November 1974.)
"Global supply shortages, changing dietary demands in emerging markets, growing
populations and alternative energy production are among the many powerful factors
driving global demand and skyrocketing prices for agribusiness products," Patti
stated. "In our view, small capitalization companies are best positioned to
translate this demand into significant growth."
The new ETF comes with an expense ratio of 75 basis points. Julie Abbett,
senior vice president and head of portfolio management at IndexIQ, PMs the ETF.
ALPS handles distribution.
Company Press Release
RYE BROOK, New York, (March 21, 2011) – IndexIQ, a leading developer of index-
based liquid alternative investment solutions, is set to launch the IQ Global
Agribusiness Small Cap ETF (NYSE Arca: CROP) on March 22, 2011, it was announced
today.
CROP is the first Exchange-Traded Fund (ETF) designed to provide exposure to
global small
capitalization companies engaged in the fast-growing agribusiness sector,
including agricultural
machinery, livestock operations, crop production and farming, and biofuels and
alternative energy. It
seeks to track, before fees and expenses, the performance of the IQ Global
Agribusiness Small Cap Index
(Bloomberg Index Ticker: IQSMCROP).
The CROP launch comes only one month after food prices soared 3.9% in February,
representing
the biggest monthly increase since November 1974. Meat and dairy prices also rose
in February, boosted
by higher prices for corn and soybean that are used in animal feed. Economists
widely expect food prices
to continue rising for the remainder of 2011. Earlier this month, the United
Nations Food and Agriculture
Organization announced that global food prices have risen to their highest levels
since 1990, when the
agency first began tracking them.
“Global supply shortages, changing dietary demands in emerging markets, growing
populations,
and alternative energy production are among the many powerful factors driving
global demand and
skyrocketing prices for agribusiness products. We believe these trends are likely
to persist for the
foreseeable future,” said Adam Patti, chief executive officer at IndexIQ. “In our
view, small
capitalization companies are best positioned to translate this demand into
significant growth. They are
under-represented in other investment options, are typically faster growing and,
in many cases, are
undervalued relative to mega-cap multi-national companies, making them
attractively positioned for
growth and for acquisitions by the larger global players. We believe CROP is an
efficient vehicle for
gaining exposure to this dynamic sector and to these companies worldwide.”
The IQ Agribusiness Small Cap Index is float-adjusted and market capitalization-
weighted. To be
included in the index, companies must have a minimum average market
capitalization of $150 million for
the prior 90-day period. Stocks are required to have a minimum average daily
trading volume of at least
$1 million for the prior 90 days, and a minimum monthly volume of 250,000 shares
for the prior six
months. The Index’s components and their respective weights are rebalanced
quarterly.
IndexIQ is the sponsor of a number of index-based alternative investment products
designed to
“democratize” the alternative investment landscape, including:
• IQ Alpha Hedge Strategy Fund (IQHIX – Institutional Share Class; IQHOX –
Investor
Share Class), the first open-end, no-load Hedge Fund Replication mutual fund;
• IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI), the first US-listed Hedge
Fund
Replication Exchange-Traded Fund;
• IQ Global Resources ETF (NYSE Arca: GRES), the first hedged Global Natural
Resources
ETF;
• IQ Merger Arbitrage ETF (NYSE Arca: MNA), the first Merger Arbitrage ETF;
• IQ Hedge Macro Tracker ETF (NYSE Arca: MCRO), the first Global Macro/Emerging
Markets Hedge Fund Replication ETF;
• IQ Real Return ETF (NYSE Arca: CPI), the first US-listed “Real Return” ETF,
which seeks
to generate a real return above the rate of inflation as measured by changes in
the Consumer
Price Index;
• IQ Canada Small Cap ETF (NYSE Arca: CNDA), the first Canada small cap ETF;
• IQ Australia Small Cap ETF (NYSE Arca: KROO), the first Australia small cap
ETF;
• IQ South Korea Small Cap ETF (NYSE Arca: SKOR), the first South Korea small cap
ETF;
• IQ Taiwan Small Cap ETF (NYSE Arca: TWON), the first Taiwan small cap ETF.
IndexIQ products are designed to be liquid, transparent, low cost, and accessible
to a broad range of
investors.*
About IndexIQ
Based in Rye Brook, New York, IndexIQ is a leading developer of index-based
liquid alternative investment
solutions that combine the benefits of traditional index investing with the
risk-adjusted return potential sought by
the best active managers. The company’s philosophy is to democratize investment
management by making
innovative alternative investment strategies available to investors in low cost,
liquid and transparent products.
IndexIQ strategies are marketed through the company’s proprietary investment
products and select partnerships
with leading global financial institutions. Additional information about the
company and its products can be found
at www.IndexIQ.com.
*Ordinary brokerage commissions apply. IndexIQ’s ETF holdings are available daily
on IndexIQ’s website. ETFs
are liquid in that they are exchange-traded.
The IQ Alpha Hedge Strategy Fund (IQ Fund), the IQ Hedge Multi-Strategy Tracker
ETF (IQ Multi-Strategy ETF),
and the IQ Macro Tracker ETF (IQ Macro ETF) are not hedge funds and do not invest
in hedge funds. The IQ
Alpha Hedge Strategy Fund is a registered open-end mutual fund that invests in
exchange-traded funds (ETFs) and
similar securities in an attempt to replicate the performance characteristics of
certain hedge fund investing styles,
but with less cost, more liquidity, and greater portfolio transparency than
traditional hedge funds. There can be no
assurance that the Funds’ investment strategies will be successful. The
investment performance of the IQ Multi-
Strategy ETF, the IQ Macro ETF and the IQ Real Return ETF (collectively, the IQ
ETFs), because they are funds
of funds, depends on the investment performance of the underlying ETFs in which
they invest. There is no
guarantee that the IQ ETFs themselves, or each of the underlying ETFs in the
Funds’ portfolios, will perform
exactly as its underlying index. The IQ ETFs are non-diversified and susceptible
to greater losses if a single
portfolio investment declines than would a diversified mutual fund. The IQ ETFs’
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 IQ ETF’s
underlying ETFs to be more volatile
than if the underlying ETFs had not been leveraged.
As CROP’s investments are concentrated in the Agribusiness sector, adverse
weather conditions, economic forces
and government policy and regulation could adversely affect CROP’s portfolio
companies and, thus, CROP’s
financial situation and performance. CROP is susceptible to foreign securities
risk. Since CROP invests in foreign
markets, it will be subject to risk of loss not typically associated with
domestic markets. CROP is concentrated in
small capitalization companies, whose stock prices generally are more volatile
than those of larger companies and
also are more vulnerable than those of large capitalization companies to adverse
business and economic
developments. Both CROP’s ability to track its Index and fund returns in general
may be adversely impacted by
changes in currency exchange rates. The ETF is new and has limited operating
history. The fund is not suitable for
all investors. Investors in the fund should be willing to accept a high degree of
volatility in the price of its shares
and the possibility of significant losses. An investment in the fund involves a
substantial degree of risk and the fund
does not represent a complete investment program.
Investors are reminded that all investing involves risk, including possible loss
of principal. Consider the Funds’
investment objectives, risks, charges and expenses carefully before investing. A
prospectus with this and other
information about the Funds may be obtained by visiting www.indexiq.com or by
calling (888) 934-0777. Read the
prospectus carefully before investing.
The Funds are distributed by ALPS Distributors, Inc. (ALPS), which is not
affiliated with IndexIQ. Adam Patti is a
registered representative of ALPS.
IDX000635.033112
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