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Democratizing Alternatives: Real-World Hedge Fund Replication

Democratizing Alternatives
Financial advisors increasingly recommend hedge funds and other alternative investments to their clients as a result of their various portfolio diversification benefits. However, the vast majority of investors do not meet the minimum net worth requirements set by the SEC to allow them to invest in hedge funds and, for those who do, a number of other systemic problems exist, including high fees, diminishing returns, long lock-up periods, and an overall lack of education regarding the risks associated with such investments.

Hedge Funds at the Crossroads

Since the early 1990s, hedge funds have grown at a staggering rate as a result of the increasing demand for the diversification benefits and other performance characteristics they offer. Receiving less attention, though much more significant for investors, are the problems that exist with current hedge fund offerings, such as:

  • High Fees
  • Lack of Liquidity
  • Limited Portfolio Transparency
  • Manager-Specific Risk
  • Access Issues

All of these factors have laid the groundwork — and the demand — for new product innovation.

The Power of Uncorrelated Returns

Despite the problems facing the hedge fund industry, there continues to be growing demand due to their use within a well diversified portfolio. Financial advisors continue to recommend hedge funds as a portfolio diversifier, to capture the wide range of risk and return characteristics they offer.

The Alternative to AlternativesTM

IndexIQ was founded in part to solve the fundamental question of how to cost-effectively provide all investors access to sophisticated investment strategies typically reserved for institutional and ultra high-net-worth investors.

IndexIQ's mission is to offer solutions to many of the industry's most significant problems by providing a broad range of alternative investment ETFs and index solutions. As part of this mission, we leverage leading-edge investment research from our top academics and quantitative analysts to create low-cost, easy-to-use strategies for all investors.
 

Investors should carefully consider the investment objectives, risks, charges and expenses of the Funds before investing. To obtain a prospectus containing this and other important information, please call 1-888-934-0777 or click here to view or download a prospectus online. Read the prospectus carefully before you invest. There are risks involved with investing including the possible loss of principal. Past performance does not guarantee future results.