IndexIQ. Smart solutions for better portfolios. by MainStay Investments

Transcription

1 IndexIQ Smart solutions for better portfolios by MainStay Investments

2 An Innovative Marriage of ETFs and Alternative Investments In recent years, exchange-traded funds (ETFs) have steadily grown in popularity. In essence, ETFs are securities that track an index and trade like stocks throughout the day. In addition to the enhanced liquidity intraday trading offers, ETFs provide a number of features, including transparency, flexibility, tax efficiency, and low expense ratios. Another notable trend in the financial market has been the proliferation of alternative investments. Unlike stocks and bonds, alternative investments generally seek absolute returns in all market conditions, along with reduced portfolio volatility/downside risk. Alternative investments can also lead to enhanced diversification, as they tend to hold non-correlated assets. Hedge funds are perhaps the most widely ETFs IndexIQ known form of alternative Alternatives investments. IndexIQ has married the key features of ETFs and alternative investments with its suite of index-based alternative investment solutions. These investments combine the benefits of traditional index investing with the risk-adjusted return potential sought by active managers. Alternative investments are speculative, not suitable for all clients, and intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment. Diversification cannot assure a profit or protect against loss in a declining market.

3 philosophy IndexIQ: Smart solutions for better portfolios At IndexIQ, we innovate. Our philosophy is to democratize alternative investments. Our solutions are built upon leading research and proprietary methodologies that offer investors a new way to access an asset class. Formed in 2006, IndexIQ was founded against a backdrop of cutting-edge academic research. Its founding philosophy is to democratize alternative investments by offering institutional class alternative investment solutions, enabling a broader range of investors to take advantage of the attractive risk/ return characteristics of hedge funds as well as the structural benefits of ETFs and mutual funds. The firm is a pioneer in replicating the performance characteristics of hedge funds, and its next generation of alternative investments includes a lineup of ETFs, a mutual fund, separately managed accounts (SMAs), and ETF model portfolios. Adam Patti Chief Executive Officer IndexIQ Benefits of IndexIQ ETFs Flexibility Multiple possible uses within portfolios include core holding, tactical modifications, or for risk management purposes. Diversity Liquidity Provide exposure to a diversified basket of underlying securities. Intraday trading, securities bought and sold throughout the trading day. Cost efficiency Generally lower relative cost compared to SMAs and mutual funds 1. Tax efficiency Transparency ETF structure may reduce or eliminate short-term capital gains on portfolio turnover, thus providing significant tax alpha. Daily holdings disclosure. The nature of the IQ Hedge products allows for these poten tial benefits, which typically are not associated with traditional hedge funds. There are risks involved with investing in any such products, including the possible loss of principal. The Funds investment performance, because they are funds of funds, depends on the investment performance of the underlying ETFs in which they invest. There is no guarantee that the Funds themselves, or any of the ETFs in the Funds portfolios, will perform exactly as their underlying indexes. The Funds are non-diversified and susceptible to greater losses if a single portfolio investment declines than would a diversified mutual fund. The Funds do not invest in hedge funds and are not suitable for all investors. 1. Investors purchasing shares on a national securities exchange, national securities association, or over-the-counter trading system where shares may trade from time to time (each, a secondary market ) may be subject to customary brokerage commissions charged by their broker. 1

4 Intelligent Construction: IndexIQ s Absolute Return and Real Asset Solutions IndexIQ offers two key product types: absolute return and real asset solutions. While both provide the benefits of next generation alternative investments, their construction processes are unique. Absolute Return Hedge Fund Replication Process IndexIQ has demystified hedge fund investing and seeks to overcome some of their drawbacks, such as lack of liquidity, high costs, lack of transparency, and use of leverage and derivatives. This has been accomplished through the use of proprietary, rules-based, quantitative techniques known as IQ Hedge. IndexIQ offers a way to capture the core benefits of hedge funds with greater transparency, liquidity, and lower cost by analyzing the risk/return characteristics of several common hedge fund styles, and synthesizing those into indexes composed of highly transparent (daily holdings are published) and liquid ETFs. This fundamental structure is designed to be simple: analyze, replicate, and rebalance. But, the underlying analytical process is based on years of academic research, led in part by members of IndexIQ s investment management team, Professor Robert Whitelaw and Salvatore Bruno. * In short, IndexIQ believes that the majority of hedge fund returns is driven by common asset class exposures that can be determined through style analysis techniques and captured using liquid securities. By analyzing these factors, IndexIQ strives to replicate hedge fund portfolios and systematically rebalance these portfolios over time. Each strategy in the IQ Hedge family is a unique index, which provides specific risk/return characteristics depending on specific portfolio needs. The collection of absolute return strategies also includes a real return and inflation hedge index, as well as a global mergers and acquisitions index. IndexIQ s strategies can be used to supplement the core of an investor s portfolio, as well as provide access to well-defined segments of the financial market. Not only can they enhance a portfolio s return potential, they can also serve to help diversify an overall portfolio. * The academic foundation of the IQ Hedge strategies is the subject of the white paper, Selecting a Hedge Fund Replication Approach: Some Factors to Consider by Professor Robert Whitelaw and Salvatore Bruno, available at IQetfs.com. Diversification cannot assure a profit or protect against loss in a declining market. 2

5 approach The IQ Hedge Alternative Hedge Fund Strategies Targeted for Replication Hedge fund replication provides the risk/return benefits of investing in hedge funds, without the structural impediments of hedge funds. Hedge fund replication provides greater liquidity, transparency, lower fees, and tax efficiency. Global Macro Long/Short Market Neutral Uses macro analysis (i.e., political trends, macroeconomics, etc.) to help identify dislocations in equity, fixed income, currency, and commodity markets. Invests both long and short in equity markets and diversifies risk by limiting the net exposure to particular sectors, regions, or market capitalizations. Focuses on companyspecific anomalies and other trading opportunities. Invests both long and short in equity markets while capturing inefficiencies in relative valuations. Event- Driven Invests in a combination of credit opportunities, such as high yield, leveraged loans, capital structure arbitrage, and event-driven equities (i.e., risk arbitrage, holding company arbitrage, and special situations). Fixed Income Arbitrage Employs strategies that seek to take advantage of price differentials and inefficiencies between related fixed income securities. Emerging Markets Invests in financial assets (i.e., equities, sovereign and corporate debt issues, currencies, and other instruments) of countries in emerging markets (i.e., countries that are in a transitional state from developing to developed). The IQ Hedge Index Strategies seek to replicate the performance characteristics of different hedge fund strategies and, in doing so, include index components with exposures to factors, such as emerging markets, real estate, commodities, and currencies, which are subject to increased volatility and other risks. 3

6 IndexIQ s real asset solutions offer unique exposures, and its flagship strategy utilizes Real Assets IndexIQ s product suite also includes a number of commodity/natural resources and real estate-centric solutions. Each of these solutions tracks the performance of underlying indices, such as those tied to commodities (i.e., oil, energy, livestock, precious/ industrial metals, timber, water, etc.) or real estate (via real estate investment trusts). a systematic investment process, designed to identify opportunities in markets exhibiting Global Resources Global Agribusiness Global Oil trending or momentum characteristics across various commodity U.S. Real Estate Canada Australia asset classes. For more information on how to gain access to IndexIQ s innovative solutions, please call or visit us at IQetfs.com. The nature of the IQ Hedge products allows for these poten tial benefi ts, which typically are not associated with traditional hedge funds. There are risks involved with investing in any such products, including the possible loss of principal. The Funds investment performance, because they are funds of funds, depends on the investment performance of the underlying ETFs in which they invest. There is no guarantee that the Funds themselves, or any of the ETFs in the Funds portfolios, will perform exactly as their underlying indexes. The Funds are non-diversifi ed and susceptible to greater losses if a single portfolio investment declines than would a diversifi ed mutual fund. The Funds do not invest in hedge funds and are not suitable for all investors. 4

7 experience Industry Expertise IndexIQ s management team is comprised of seasoned executives with a long track record of success in developing and distributing innovative investment solutions designed to serve the needs of investors. Academic Rigor IndexIQ s investment solutions are rooted in leading edge academic research. This research and insight from influential academic leaders have helped establish IndexIQ as a pioneer in the development of innovative alternative investment solutions.

8 The MainStay Investments Advantage We believe our multi-boutique structure and thought leadership give us a competitive advantage, and we seek to deliver long-term results to our clients. Multi-boutique investments access to 11 institutional asset managers With our multi-boutique structure, investors can access independent and highly specialized investment managers through MainStay Funds, exchange-traded funds, closed-end funds, non-traditional strategies, and separately managed accounts. Long-term perspective maintaining a disciplined approach through all market cycles While MainStay s investment boutiques are autonomous and independent, they all share a long-term perspective, a focus on quality, and a commitment to excellence. Thought leadership helping you make informed investment decisions We provide investment insights and unique perspectives, as well as wealth-building and wealth-preservation educational tools. Consider the Funds investment objectives, risks, charges and expenses carefully before investing. The prospectus and the statement of additional information include this and other relevant information about the Funds and are available by visiting IQetfs.com or calling Read the prospectus carefully before investing. For more information IQetfs.com MainStay Investments is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. IndexIQ is the indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC. ALPS Distributors, Inc. (ALPS) is the principal underwriter of the ETFs. NYLIFE Distributors LLC is a distributor of the ETFs and the principal underwriter of the mutual fund. NYLIFE Distributors LLC is located at 169 Lackawanna Ave., Parsippany, NJ ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC. Not FDIC/NCUA Insured Not a Deposit May Lose Value No Bank Guarantee Not Insured by Any Government Agency ME ME86a-04/15

9 Effective April 1, 2016, the address for NYLIFE Distributors LLC will be 30 Hudson Street, Jersey City, NJ instead of 169 Lackawanna Avenue, Parsippany, NJ MS MS08i-02/16