The fund has lowered its management fee and began tracking a new Bloomberg inflation-tied index to better reflect the market environment and evolving inflationary landscape.
NEW YORK, New York, March 1, 2022 – IndexIQ today announced that effective February 28, 2022, the IQ Real Return ETF (ticker: CPI) has completed the transition to tracking the Bloomberg IQ Multi-Asset Inflation Index in a new relationship with Bloomberg Index Services Limited, with the objective of providing investors with better inflation exposure.
Under these changes, the Fund aims to provide investors with a hedge against the inflation rate by providing diversified exposure to assets that have historically exhibited positive sensitivity to the Consumer Price Index.1 The Bloomberg IQ Multi-Asset Inflation Index is comprised of U.S. Treasury Inflation-Protected Securities (TIPS) of short-, intermediate-, and long-term maturities, U.S. large capitalization equity securities, and commodities, which will principally include exposure through pooled vehicles.
The management fee has also decreased from 0.48% to 0.29%, making it one of the a more competitively priced inflation-focused ETFs on the market.2 IndexIQ and Bloomberg has published a white paper on a multi-asset approach to inflation-protected investments, available online here. They will be hosting a webinar on the subject on April 5, 2022, with registration to attend available here.
Salvatore Bruno, Chief Investment Officer with IndexIQ said:
"Inflation risk is one of the biggest concerns for investors and their portfolios right now. As we recently heard from Chairman Powell, the Fed is continuing to monitor this data, eyeing rate hikes and a potential faster tightening than had previously been expected. It’s a crucial time for investors to have access to best-in-class tools that have the potential to dampen the effects of high inflationary periods and we believe these updates to the Index that underlies our CPI ETF, including the reduction of the management fee, reflect the current economic environment and suit the marketplace’s needs for ways to help mitigate the impacts of inflation. We’re excited to utilize the capabilities of the Bloomberg Indexing team to make these changes and look forward to sharing our expertise and research with investors and advisors alike on this key topic.”
Dave Gedeon, Bloomberg Global Head of Multi-Asset Indices, said:
"Bloomberg’s index team is always focused on delivering the right solution for our clients and partners and we believe we have built a thoughtful process to address the complex impacts of inflation on portfolios. It is exciting to partner with IndexIQ in delivering the Bloomberg IQ Multi-Asset Inflation Index as the new benchmark for CPI."
For more information on the fund and on IndexIQ’s full suite of ETF offerings, as well as insights and commentary on inflation and the current market environment, please visit our website here.
1. The Consumer Price Index is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the Consumer Price Index are used to assess price changes associated with the cost of living.
2. IndexIQ the Advisor has contractually agreed to waive a portion of the management fee equal to 0.06% of the Fund’s average daily net assets until August 31, 2022.
IndexIQ, a New York Life Investments company, is a provider of exchange-traded funds (ETFs), with a decade of offering highly differentiated and innovative solutions to retail and institutional investors. With $5.1 billion in assets under management as of December 31, 2021, IndexIQ leverages the asset management capabilities of New York Life Investments' multi-boutique platform into its suite of offerings which include: fixed income, equities, alternatives, ESG components and specialty asset classes. For additional information on IndexIQ, visit https://www.newyorklifeinvestments.com/etf or follow us on Twitter or LinkedIn.
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Debt Securities Risk
In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible
Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities, and exposure to commodities, directly or through other securities, can cause the value of the Fund’s assets to decline or fluctuate in a rapid and unpredictable manner.
Derivatives often involve a high degree of financial risk in that a relatively small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable as well as favorable, in the price of the derivative instrument. Investments in derivatives may increase the volatility of a fund’s net asset value and may result in a loss to the fund.
Inflation-Protected Security Risk
The value of inflation-protected securities, including TIPS, generally will fluctuate in response to changes in “real” interest rates, generally decreasing when real interest rates rise and increasing when real interest rates fall.
Large-Capitalization Companies Risk
Large-capitalization companies may be less able than smaller capitalization companies to adapt to changing market conditions. Large-capitalization companies may be more mature and subject to more limited growth potential compared with smaller capitalization companies. During different market cycles, the performance of large-capitalization companies has trailed the overall performance of the broader securities markets.
Bloomberg Index Services Limited serves as the index provider for the New Index. An investmen cannot be made in an index. The New Index seeks to provide investors with a hedge against the inflation rate by providing diversified exposure to assets that have historically exhibited positive sensitivity to the Consumer Price Index, or CPI. The New Index is comprised of U.S. Treasury Inflation-Protected Securities (TIPS) of short-, intermediate-, and long-term, U.S. large capitalization equity securities and commodities, which may include direct exposure to commodities or exposure through pooled vehicles or derivative instruments.
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. Read the prospectus carefully before investing.
"New York Life Investments" is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company. IndexIQ® is the indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC and serves as the advisor to the IndexIQ ETFs. ALPS Distributors, Inc. (ALPS) is the principal underwriter of the ETFs, and NYLIFE Distributors LLC is a distributor of the ETFs. NYLIFE Distributors LLC is located at 30 Hudson Street, Jersey City, NJ 07302. ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC.
“New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company.
“Bloomberg®” and Bloomberg IQ Multi-Asset Inflation Index are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the index (collectively, “Bloomberg”) and have been licensed for use for certain purposes by Bloomberg IQ Multi-Asset Inflation Index. Bloomberg is not affiliated with IndexIQ Advisors LLC, and Bloomberg does not approve, endorse, review, or recommend IQ Real Return ETF. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to IQ Real Return ETF.