New ETFs are designed to provide exposure to those companies best positioned for future innovation and expansion of existing capabilities through sustained investment in R&D
IndexIQ, a leading provider of innovative multi-asset investment solutions, today announced the expansion of its ETF product lineup with the launch of three new equity-focused strategies:
- IQ U.S. Large Cap R&D Leaders ETF (LRND)
- IQ U.S. Mid Cap R&D Leaders ETF (MRND)
- IQ Global Equity R&D Leaders ETF (WRND)
The funds are designed to offer exposure to the domestic and global companies, respectively, that are consistently reinvesting into their research and development activities, positioning themselves for future innovations and the expansion of existing capabilities.
LRND, MRND, and WRND seek to track to the price and yield performance of the IQ U.S. Large Cap R&D Leaders Index, IQ U.S. Mid Cap R&D Leaders Index, and IQ Global Equity R&D Leaders Index (together the “Indexes”), respectively.
The universe of eligible securities begins with the Russell 1000 Index for the index underpinning LRND; the Russell Midcap Index for the index underpinning MRND; and the FTSE All-World Index for the index underpinning WRND. From there, the U.S.-focused portfolios are narrowed down to include the top 100 equities based on R&D reinvestment, while the global portfolio includes the top 200 such equities. Portfolios are then weighted based on R&D reinvestment.
Salvatore Bruno, Chief Investment Officer with IndexIQ said:
“Historically, companies that prioritize investing into research and development have shown favorable tendencies towards outperformance1. A greater focus on R&D may lead to greater opportunities for innovation and for key expansions of existing capabilities. However, investors have often had a difficult time assigning an accurate value to the R&D spending and thus have tended to undervalue its potential benefits. This suite was designed to provide investors and advisors with a powerful new set of tools for adding the most innovative companies, and the companies that are investing in future innovations with the potential to unlock future value, to their equity portfolios.”
Ian Forrest, Head of IndexIQ said:
“We’re very excited to be expanding our equity ETF lineup with these timely new funds that provide investors with a new lens to understand and act on key trends that can have the potential to provide a meaningful impact on a portfolio. These ETFs seek to offer investors powerful tools to construct better portfolios for clients and provide smart exposure to what we believe to be the best and most innovative companies.”
The R&D ETF suite joins a multi-asset family of cutting-edge ETFs from IndexIQ that includes the IQ Hedge Multi-Strategy ETF (QAI), the first liquid alternative ETF; innovative fixed income offerings like the IQ MacKay ESG Core Plus Bond ETF (ESGB); and the firm’s Dual Impact ETF suite, which includes IQ Healthy Hearts ETF (HART), IQ Engender Equality ETF (EQUL), IQ Cleaner Transport ETF (CLNR), and IQ Clean Oceans ETF (OCEN).
For more information on the fund and on IndexIQ’s full suite of ETF offerings, please visit our website here.
About IndexIQ
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.
Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal, or volatility of returns. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors, and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product, or strategy will or is likely to achieve profits. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Clients should consult your tax or legal advisor regarding such matters. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
The constituents of the Russell Midcap® Index, Russell 1000® Index and FTSE All-World® Index were used by IndexIQ LLC as the starting universe for selection of the companies included in the IQ U.S. Mid Cap R&D Leaders Index, IQ U.S. Large Cap R&D Leaders Index and IQ Global Equity R&D Leaders Index, respectively. FTSE International Limited and its affiliates (“FTSE Russell”) do not in any way create, calculate, maintain, review, sponsor, support, promote or endorse the IQ U.S. Mid Cap R&D Leaders Index, IQ U.S. Large Cap R&D Leaders Index and IQ Global Equity R&D Leaders Index or the IQ U.S. Mid Cap R&D Leaders ETF, IQ U.S. Large Cap R&D Leaders ETF and IQ Global Equity R&D Leaders ETF. In no event shall any FTSE Russell party have any liability for any direct, indirect, special, incidental, punitive, consequential (including without limitation lost profits) or any other damages in connection with the constituents of the Russell Midcap® Index, Russell 1000® Index and FTSE All-World® Index or the IQ U.S. Mid Cap R&D Leaders Index, IQ U.S. Large Cap R&D Leaders Index and IQ Global Equity R&D Leaders Index.
IQ U.S. Mid Cap R&D Leaders ETF
Principal Risks
Equity Securities Risk
Investments in common stocks and other equity securities are particularly subject to the risk of changes in investors’ perceptions of the financial condition of an issuer, conditions affecting equity markets generally and political and/or economic events. Equity prices may also be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.
Mid-Capitalization Companies Risk. Mid-capitalization companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than larger, more established companies.
New Fund Risk
The Fund is a new fund. As a new fund, there can be no assurance that it will grow to or maintain an economically viable size, in which case it could ultimately liquidate.
Non-Diversified Risk
The Fund is classified as a “non-diversified” investment company under the Investment Company Act of 1940 (the “1940 Act”), which means it may invest a larger percentage of its assets in a smaller number of issuers than a diversified fund. To the extent the Fund invests its assets in a smaller number of issuers, the Fund will be more susceptible to negative events affecting those issuers than a diversified fund.
Industry/Sector Concentration Risk.
The Fund’s investment of a large percentage of its assets in the securities of issuers within the same industry or sector means that an adverse economic, business or political development may affect the value of the Fund’s investments more than if the Fund were more broadly diversified. A concentration makes the Fund more susceptible to any single occurrence and may subject the Fund to greater market risk than a fund that is not so concentrated.
IQ U.S. Large Cap R&D Leaders ETF
Principal Risks
Equity Securities Risk
Investments in common stocks and other equity securities are particularly subject to the risk of changes in investors’ perceptions of the financial condition of an issuer, conditions affecting equity markets generally and political and/or economic events. Equity prices may also be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.
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.
New Fund Risk
The Fund is a new fund. As a new fund, there can be no assurance that it will grow to or maintain an economically viable size, in which case it could ultimately liquidate.
Non-Diversified Risk
The Fund is classified as a “non-diversified” investment company under the Investment Company Act of 1940 (the “1940 Act”), which means it may invest a larger percentage of its assets in a smaller number of issuers than a diversified fund. To the extent the Fund invests its assets in a smaller number of issuers, the Fund will be more susceptible to negative events affecting those issuers than a diversified fund.
Industry/Sector Concentration Risk.
The Fund’s investment of a large percentage of its assets in the securities of issuers within the same industry or sector means that an adverse economic, business or political development may affect the value of the Fund’s investments more than if the Fund were more broadly diversified. A concentration makes the Fund more susceptible to any single occurrence and may subject the Fund to greater market risk than a fund that is not so concentrated.
IQ Global Equity R&D Leaders ETF
Principal Risks
Equity Securities Risk
Investments in common stocks and other equity securities are particularly subject to the risk of changes in investors’ perceptions of the financial condition of an issuer, conditions affecting equity markets generally and political and/or economic events. Equity prices may also be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.
Foreign Securities Risk
Foreign securities can be subject to greater risks than U.S. investments, including currency fluctuations, less liquid trading markets, greater price volatility, political and economic instability, less publicly available information, and changes in tax or currency laws or monetary policy. These risks are likely to be greater for emerging markets than in developed markets.
New Fund Risk
The Fund is a new fund. As a new fund, there can be no assurance that it will grow to or maintain an economically viable size, in which case it could ultimately liquidate.
Non-Diversified Risk
The Fund is classified as a “non-diversified” investment company under the Investment Company Act of 1940 (the “1940 Act”), which means it may invest a larger percentage of its assets in a smaller number of issuers than a diversified fund. To the extent the Fund invests its assets in a smaller number of issuers, the Fund will be more susceptible to negative events affecting those issuers than a diversified fund.
Industry/Sector Concentration Risk.
The Fund’s investment of a large percentage of its assets in the securities of issuers within the same industry or sector means that an adverse economic, business or political development may affect the value of the Fund’s investments more than if the Fund were more broadly diversified. A concentration makes the Fund more susceptible to any single occurrence and may subject the Fund to greater market risk than a fund that is not so concentrated.
Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal, or volatility of returns. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors, and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product, or strategy will or is likely to achieve profits. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Your clients should consult your tax or legal advisor regarding such matters. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
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.
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.
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1 The Stock Market Valuation of Research and Development Expenditures, https://alphaarchitect.com/2011/09/21/rd-to-your-portfolios-rescue/
View source version on businesswire.com: https://www.businesswire.com/news/home/20220208005431/en/
Contacts
IndexIQ:
Allison Scott / Sara Guenoun
allison_scott@nylim.com / sara_j_guenoun@newyorklife.com
MacMillan Communications
Chris Sullivan/Julia Stoll
chris@macmillancom.com / julia@macmillancom.com
