IndexIQ, an upstart ETF provider best known for its hedge fund replication products, has filed a 40-APP application with the Securities and Exchange Commission that would clear the way for it to launch a number of novel ETFs, including a 130/30 product.
130/30 funds follow a popular hedge funds strategy that pairs a 130 percent long position in favored securities with a 30 percent short position in unfavored securities. The resulting portfolio is 100 percent net long, but amplifies the returns on a portfolio manager’s favorite choices.
40-APP filings are an initial step in the ETF registration process that takes place prior to the writing of a prospectus, and do not mean that funds are due to launch soon.
ProShares already offers an index-based 130/30 product, the ProShares Credit Suisse 130/30 ETF (NYSEArca: CSM), which has $29.5 million in assets.
The IndexIQ 40-APP filing, which also covers two additional classes of ETFs, is available here.
Be careful when making fruit-basket comparisons; you’re likely to come up with lemons.
Movers and shakers in the ETF world are often just the opposite.
With the S&P 500 topping 2,000, it’s worth understanding how you ended up in the wrong large-cap ETF.
Pimco is going back to what it does best—generating alpha through fixed-income exposure.