New mutual fund to ape hedge performance

Hedge fund performance replication has come to the mutual fund industry in the form of the IQ Alpha Hedge Strategy Fund.
JUL 01, 2008
Hedge fund performance replication has come to the mutual fund industry in the form of the IQ Alpha Hedge Strategy Fund, which was launched yesterday. The fund, which does not yet have a ticker symbol, is designed to mimic the performance of the IQ Alpha Hedge Fund Index, which was created in December and is based on several underlying strategies that were established in March 2007. Interest in hedge funds has grown enormously over the past decade, however, the vast majority of investors have not had access to this important asset class,” said Adam Patti, chief executive of IndexIQ, the Rye Brook, N.Y.-based company that created the index and is managing the mutual fund. Like most hedge fund replication indexes, this one will invest primarily in exchange traded funds and other liquid securities, but not directly in any hedge funds. It also employs 25% leverage to enhance performance. The retail-class shares have a $2,500 minimum investment requirement and have a 1.64% total expense ratio. Year-to-date through June, the index was down 1.6%, which compares to an 11.9% decline by the Standard & Poor’s 500 stock index over the same period.

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