IndexIQ

Alternative Equity Indexes

IndexIQ's Equity Alterative Indexes are based on a broad range of empirical evidence that shows that investments in the shares of intangibles-intensive companies yield systematic positive, risk-adjusted future returns—a typical symptom of undervalued stocks.

During the last 20 years, the average market value of the S&P 500 companies has diverged from their book value. The increasing gap between these measures implies that net physical and financial assets, reflected in companies' book value (i.e., balance sheet equity), account for less than 25% of corporate stock market value. This gap is being driven by alternative measures of company value, which traditional accounting-based metrics fail to accurately value. Such measures typically are backward-looking, whereas intangible asset values tend to represent a company's future value potential.

Intangible value is driven primarily through consistent investment in innovation, such as research and development, training employees to better serve customers, enhancing brand and trademark values to secure competitive positions, and developing unique business processes to streamline operations. Since competitors have equal access to physical assets, such assets typically fail to generate abnormally high profits or create sustained values. Those higher profits and sustained values in modern economies emanates from intangibles.

IndexIQ's Equity Alternative Indexes represent a broad suite of investment strategies designed to harness the power of intangible asset value.