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IndexIQ Plans a Long-Short ETF

By Don Dion

 About this article:
 In the past few weeks, IndexIQ has carved a niche into the ETF realm with alternative investment funds such as the IQ CPI Inflation Hedged ETF and the IQ ARB Merger Arbitrage ETF. Recently, the firm has been planning another new instrument designed to provide investors with exposure to a 130/30 investment strategy. Earlier this year, ProShares released a similar fund, the ProShares Credit Suisse 130/30 ETF. In order to employ a 130/30 strategy, a manager invests the whole value of a portfolio into a ranked list of stocks, setting aside a certain percentage to short the poorest-performing members. Using the cash generated from the shorts (in this case 30% of the portfolio), the portfolio manager is then able to add to long positions, thus magnifying exposure to top holdings. This is expected to lead to excess returns. While no holdings have been released for the...

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