IQ CPI INFLATION HEDGED ETF (CPI)
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of its Underlying Index, the IQ CPI Inflation Hedged Index, developed by IndexIQ. The investment objective is not fundamental and may be changed without shareholder approval.
Principal Investment Strategy
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Underlying Index. The Fund invests primarily in the Underlying Index Components that make up the Underlying Index.
The Underlying Index seeks to provide investors with a hedge against changes in the U.S. inflation rate by providing a “real return” or a return above the rate of inflation, as represented by the CPI (the “Strategy”). The CPI, which is published by the Bureau of Labor Statistics, is a measure of the average change in prices over time of goods and services purchased by households. The CPI is reported with monthly frequency, but due to seasonality and other factors the monthly change in the CPI is reported both as the 1-month change and also on a rolling 12-month basis (the “Rolling 12-month CPI Returns”). It is the Rolling 12-month CPI Returns, not the monthly returns of the CPI, that the Underlying Index incorporates into its construction process.
The Underlying Index includes long exposures and short exposures (through long positions in inverse and/or ultra inverse ETFs, as applicable) to asset classes whose returns incorporate inflation expectations in an attempt to achieve its investment objective. This is based on the premise that capital market returns tend to be forward looking and anticipate economic developments, including inflation expectations.
The Underlying Index Components of this Strategy generally provide exposures to:
U.S. large cap equity; U.S. small cap equity; Foreign equity (Europe, Australasia & Far East); U.S. government short-, intermediate-, and long-term maturity obligations; Foreign sovereign debt; Foreign currencies and currency futures; U.S. real estate; and Commodities.
The weights of the Underlying Index Components are rebalanced on a monthly basis. Annually, IndexIQ conducts a review process pursuant to which it may reconstitute the Underlying Index by adding or subtracting Underlying Index Components according to IndexIQ’s rules-based process.
IQ ARB GLOBAL RESOURCES ETF (GRES)
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of its Underlying Index, the IQ ARB Global Resources Index, developed by IndexIQ. The investment objective is not fundamental and may be changed without shareholder approval.
Principal Investment Strategy
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Underlying Index. The Fund invests primarily in the Underlying Index Components that make up the Underlying Index. The Fund does not invest directly in commodities and the Underlying Index does not include commodities as Underlying Index Components.
The Underlying Index’s objective is to employ a systematic investment process designed to identify opportunities in markets exhibiting trending or momentum characteristics across commodity asset classes, represented by companies that operate in commodity-specific market segments and whose equity securities trade in developed markets, including the U.S. The Underlying Index uses a quantitative process that focuses on statistically robust patterns in the return series of various stocks grouped together into different commodity segments based on their primary line of business. These segments include Livestock; Precious Metals; Grains, Food, and Fiber; Energy; Metals; Timber; Coal; and Water. The Underlying Index first identifies companies that are engaged primarily in business activities consistent with each of these several commodity segments, as determined by Standard Industrial Classification (“SIC”) code classifications. Based on certain liquidity criteria, the list of eligible index components is narrowed to include a smaller group of qualified companies, segmented based on the respective commodity sub-sets in which they operate. From this smaller universe of companies, IndexIQ constructs a constrained market capitalization-weighted group of Underlying Index Components, with position sizes affected by price momentum and other fundamental factors. In addition, the Underlying Index includes short exposure to the U.S. and non-U.S. equity markets, effected through a long position in inverse and/or ultra inverse ETFs, in order to isolate, at least in part, the commodity-related attributes of the Underlying Index from the general equity market exposure of the Underlying Index.
The list of Underlying Index Components is reconstituted on an annual basis and their respective weights are rebalanced on a monthly basis.
The Underlying Index Components of this Strategy generally provide exposures to U.S. and non-U.S. equity securities. At least 40% of the Fund’s assets will be comprised of securities in two or more non-U.S. countries.
You can find the full prospectus’: HERE