Another Hedge Fund ETF Launches (MCRO, QAI)

By Douglas A. McIntyre Updated Apr 27, 4:06PM EDT · Published Jun 9, 9:39AM EDT

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NYSE Euronext has begun trading the IQ Hedge Macro Tracker ETF (NYSE: MCRO), sponsored by IndexIQ Advisors LLC. This marks the second product by IndexIQ Advisors to list on NYSE Arca after its IQ Hedge Multi-Strategy Tracker ETF (NYSE: QAI) launched on March 25.

The ETF’s investment objective is to seek investment results that correspond to the price and yield performance of the IQ Hedge Macro Index, its underlying index. The underlying index also has a particular focus on emerging markets.

Where this gets interesting, and perhaps where it gets complicated, is that the stated investment objective is not fundamental and may be changed without shareholder approval. In short, the ETF will be managed just like hedge fund where essentially investors find out what has been done after the fact.

The strategy uses a top-down macro analysis to identify dislocations in equity, fixed-income, currency and commodity markets that are expected to lead to large price movements. It ‘generally’ gives exposure to U.S. small-cap equities, as well as emerging market equity, debt and sovereign debt. More exposure is in U.S. and foreign investment grade debt, short and intermediate term U.S. government debt, foreign sovereign debt, Foreign currencies and underlying futures, real estate investment trusts, and commodities.

When this IQ Hedge Multi-Strategy Tracker ETF (NYSE: QAI) launched in March, we thought that the single biggest challenge to acceptance here was not just the rotating strategies. The liquidity and volume was where we had the largest concerns. The good news is that the forst hedge fund ETF does trade every day. Volume is still under 50,000 shares but it does trade every day and its price is up. It has not kept up with the stock market as a whole by any means, but it has significant bond exposure and is not really a stock fund so to speak. All things being equal, and in a world where investors want more and more immediate transparency, we will score the first IndexIQ hedge fund ETF a success. The proof in the pudding will of course come through time, but if Index IQ was not happy with its results of its first hedge fund ETF then it would likely not be unloading another one into a market crowded full of ETFs.

More detailed information can be found at the new ETF’s own website at IndexIQ.com.

Jon C. Ogg
June 9, 2009

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.