IndexIQ, the Rye Brook, N.Y.-based fund provider known in part
for its hedge fund replication strategies, filed paperwork with
U.S. regulators to bring to market two U.S. equity
that look to cherry-pick prospective growth- and innovation-driven
The IQ Fastest Growing Companies ETF , tracking a proprietary
index, will invest in 50 high-growth U.S. companies as measured by
sales, net income and cash flow growth as well as total return.
The portfolio is designed to serve up exposure to companies that
have historically delivered solid growth rates across multiple
financial factors, the filing said.
The IQ Innovation Leaders ETF , also tracking a rules-based
proprietary benchmark, will invest in 100 U.S. companies deemed
"highly innovative." These innovation-related factors include sales
growth, research and development expense and assets, retained
earnings, capital expenditures and intangible assets.
The fund sets out to hone in on domestic companies that have
reached high levels of sales and have consistently reinvested into
their own businesses to drive future sales and earnings growth,
according to the filing.
The strategies attempt to serve up focused exposure to pockets
of the U.S. equities universe at a time when investors are adding
risk exposure to their portfolios through equities. Last week
alone, U.S. equities ETFs attracted net inflows of more than $870
million, with international equities gathering twice that amount,
according to data compiled by IndexUniverse.
IndexIQ already sponsors 13 ETFs-such as the inflation-combating
IQ Real Return ETF (NYSEArca:CPI) and the market's first hedge fund
ETF "QAI"-with combined assets of $664 million, making it the 24
-largest ETF provider in the country.
Making The Cut
To be eligible for inclusion in the IQ Fastest Growing Companies
ETF, a company needs to be U.S.-listed and domiciled, be ranked
within the top 500 largest U.S. companies by sales, have a minimum
market capitalization of $1.5 billion, and meet minimum trading
liquidity requirements, the filing said.
Securities are selected annually, with their weightings
rebalanced once a year. As of Dec. 31, companies included in the
underlying index had market capitalization ranging from $1.5
billion to $580 billion.
Similarly, companies comprising the IQ Innovation Leaders ETF
must be U.S.-based and listed. They also need to have a market
capitalization of at least $300 million and meet trading liquidity
The portfolio and underlying index are rebalanced annually.
No tickers or fees were disclosed in the filing.
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