Hedge Fund-Like ‘QAI’ To Be 22% Cheaper

IndexIQ said it will be cutting fees on one of its most successful ETFs, the IQ Hedge Multi-Strategy Tracker ETF (QAI), by some 22%.

Effective Nov. 1, IndexIQ will waive some of its management fees, bringing QAI’s total cost—including acquired fund fees given that QAI is a fund of funds—to 0.76% from its current level of 0.98%. That’s $76 per $10,000 invested.

The move comes less than two months after IndexIQ changed expense ratios on nearly half of its ETFs, some of which saw fees cut, others increased. QAI was in the latter group at the time, facing a 2-basis-point increase related to underlying fund fees. Issuers have to pass on those costs to investors. 

QAI is a well-established ETF that first came to market in 2009 as a pioneer in the hedge fund replication space. Today it is the biggest alternative ETF, with $1.1 billion in assets and strong liquidity, trading more than $2.7 million on average every day.  

As an absolute-return strategy some consider a source of alternative exposure to bonds, QAI has gained 5% year-to-date, bringing its total returns since inception to about 30%. But the fund has been bleeding assets this year, facing $150 million in net redemptions so far in 2017.

Chart courtesy of StockCharts.com

Pointing out that QAI has “performed exactly as planned” since inception, Sal Bruno, CIO of IndexIQ, said the lower fees should increase the fund’s reach.

“Lowering the fees on this flagship ETF will allow more investors to benefit from exposure to hedge fund performance, and the diversification it provides within a well-constructed portfolio,” he said.

Contact Cinthia Murphy at [email protected]