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QAI and MNA Are Two ETFs for the 'Muddle Through' Economy


One is low-correlation and the other pure equity.

IQ Hedge Multi-Strategy Tracker ETF (NYSEARCA:QAI)

For investors seeking a low-correlation play on the broad markets, it is hard to go wrong with IndexIQ's QAI. The fund is one of the more popular ETFs from the upstart ETF issuer, and uses a fund-of-funds methodology to achieve its objective and track the IQ Hedge Multi-Strategy Index.

This benchmark harks back to the "traditional" definition of a hedge fund in that it looks to be a market neutral play that can deliver returns in any economic environment. It does this by seeking to match broad hedge fund strategies including long/short equity, global macro, market neutral, event-driven, and many others.

By using this wide combination of strategies in a fund-of-fund way, investors are left with a well diversified product that has an extremely low beta. In fact, according to the fund's fact sheet, the index beta against the S&P 500 is just 0.29, while the standard deviation for the fund is below 10% (for a one year look).

It also doesn't hurt that the fund has a heavy weighting in fixed income securities, including two of the top three holdings. Yet, beyond this, the fund does have a smattering of equity ETFs in its basket including ones targeting the EAFE markets, small caps, and the broad US market.

Still, the combination of bonds, currencies, commodities, and equities has kept QAI very stable but in a definite uptrend over the year-to-date period, as it has gained 3.2% since the start of the year. Yet, investors should also note that the product has been extremely stable, trading in a range of just $26.60 to $28.80 over the last 52 weeks.

Unfortunately, investors do have to pay for this broad exposure with somewhat high fees, as total costs come in at 1.06%. While this is high for the ETF world, it is far lower than what more typical hedge funds charge, leaving more for investors in terms of total gains.
No positions in stocks mentioned.
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