Daily ETF Watch: IndexIQ Plans Bond Funds

Firm’s first foray into fixed income will be via ETFs that invest in other ETFs.

Reviewed by: Heather Bell
Edited by: Heather Bell

New York Life-owned IndexIQ has filed for its first fixed-income ETFs. The IQ Enhanced Core Bond U.S. ETF and IQ Enhanced Core Plus Bond U.S. ETF will both track in-house indexes that comprise ETFs targeting various sectors of the U.S. debt market.

The “Enhanced Core” fund’s index will solely include investment-grade U.S. fixed-income ETFs, according to the prospectus, including those that hold U.S. Treasurys, corporate bonds and mortgage-backed securities, among other types of debt. Meanwhile, the “Enhanced Core Plus” fund will be tied to an index with a much wider scope that encompasses any type of debt security from a U.S. issuer. Not only will it cover ETFs invested in investment-grade Treasurys, corporate debt and MBS vehicles, it will also encompass U.S. high-yield debt and emerging market debt denominated in USD.

Both underlying indexes will be based on a methodology that weights the different fixed-income sectors based on their momentum relative to the momentum of the overall fixed-income market, overweighting the higher-momentum sectors and underweighting the lower-momentum sectors.

The filing is similar to the State Street Global Advisors filing profiled yesterday. The SPDR Dorsey Wright Fixed Income Allocation ETF will also track an index that comprises fixed-income ETFs. However, while the SSgA fund will only invest in other SPDR ETFs, the IndexIQ ETFs will presumably have a much wider universe to choose from.

The filing did not include expense ratios or tickers; however, it did indicate the funds would list on the NYSE Arca.

Contact Heather Bell at [email protected].

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.