In-house fixed income expertise propels IndexIQ’s growth
IndexIQ has seen its assets rise to over USD4 billion from USD1.5 billion when it was bought by New York Life Investments in 2015.
Sal Bruno (pictured), IndexIQ CIO, says: “A big part of our asset rise has been the ability to partner with other investment boutiques within the umbrella of New York Life Investments, particularly on the fixed income side.”
A relationship with MacKay Shields (MacKay), a fellow New York Life Investments boutique and a global asset manager focused on fixed income and equity investing, lies behind a number of IndexIQ’s fixed income products.
“We have been able to bring out specialized fixed income active products by partnering with MacKay,” Bruno says, listing the firm’s MMIN-IQ MacKay Municipal Insured ETF and MMIT-IQ MacKay Municipal Intermediate ETF as good examples. “We were able to bring those out almost four years ago and they have been strong performers.” Bruno says.
“The biggest change we have seen is a trend towards active management for fixed income ETFs. The initial wave of fixed income ETFs were mostly passive but now we are seeing more new ETFs coming on the active side. Intelligent screening and active management have the potential to add value beyond simply market cap weighting the entire universe of bonds.,” Bruno says. “On the Muni side, there are opportunities in a fragmented marketplace for active management in terms of seeking to create value which enables you to move away from a market cap weighted approach.”
“And we didn’t stop there because being part of New York Life Investments, we have a tremendous fixed income expertise with NYL Investors, the subadvisor of our actively managed ultra-short duration ETF, ULTR-IQ Ultra Short Duration ETF, with very competitive historical performance.”
Under the New York Life Investments umbrella, IndexIQ has access to some of the most seasoned fixed income managers who are managing more than $282 billion in assets for New York Life Insurance Company (as of 6/30/21). “Providing access to their capabilities in the ETF wrapper is a tremendous value proposition for our clients,” Bruno says.
The ESG (Environmental, Social and Governance) effort in fixed income builds upon the firm’s broader ESG focus with the launch of ESGB-IQ MacKay ESG Core Plus Bond ETF.
“This is an actively managed bond ESG ETF,” Bruno says. “ESG has been sweeping through equities but on the fixed income side, MacKay had already been running ESG bond portfolios for institutional clients.”
Bruno observes that there are different dynamics between ESG equities and ESG bonds. “Equities are a perpetual type of organism but when it comes to fixed income, you are thinking more issue by issue, asking what are you going to do with the capital you are raising in the marketplace.”
Looking forward, Bruno says that his firm will continue to try to innovate and bring product to market and continue to work with other parts of the New York Life organisation to source expertise where it exists. “This allows us to bring value to our clients, bringing the institutional quality managers that we are fortunate enough to have access to within the ETF wrapper.”
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 or calling (888) 474-7725. Read the prospectus carefully before investing.
IndexIQ® is an 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. 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.
Best US Fixed Income ETF Issuer (USD100m-USD1bn)