IndexIQ Offers Momentum-Based Fixed Income ETF
Rye Brook, N.Y.-based IndexIQ has introduced what it hails as the first ETFs to use a momentum approach to fixed-income markets.
In May, the firm launched the IQ Enhanced Core Bond U.S. ETF (AGGE) and the IQ Enhanced Core Plus Bond U.S. ETF (AGGP), both tracking smart beta-style indexes.
“Bringing a time-proven momentum investing approach to the fixed-income space is something that we have researched for some time,” said Adam Patti, IndexIQ’s CEO, in a statement. “We’re pleased for AGGE and AGGP, the first entries by IndexIQ in the fixed-income category, to deliver the opportunity for investors to build smarter portfolios by bringing the benefits of smart beta to fixed income.”
AGGE invests in sectors across the U.S. investment-grade fixed-income market, including Treasurys, investment-grade corporate bonds and investment-grade mortgage-backed securities, weighting each of the sectors based on their total return momentum.
AGGP uses a similar investment approach, but can also get exposure to high-yield debt and to the U.S. dollar-denominated debt of emerging market issuers before employing a similar weighting strategy that overweights high-momentum sectors and underweights low-momentum sectors.
“Emerging market debt has been a strong performer to start 2016, driven in large part by ongoing dovish Federal Reserve policies, improving emerging market fundamentals and a suddenly weakening dollar,” said Salvatore Bruno, CIO of IndexIQ.
Both ETFs will trade on the New York Stock Exchange. IndexIQ is a subsidiary of New York Life Investment Management Holdings.
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