Get Alternatives Exposure Through ETFs
Focus: ALTERNATIVE INVESTMENTS
IndexIQ’s ETFs give retail investors exposure to institutional-class asset categories, explains CEO Adam Patti. In part one of MoneyShow.com’s interview, he describes a couple of his indexed ETFs, including one that he puts in the small-cap REIT category.
Kate Stalter: Today I’m speaking with Adam Patti, CEO of IndexIQ. Adam, you have a very interesting company. You have a number of funds that allow investors to participate in multiple segments of the market.
You mention on your Web site that these are alternative ways of getting exposure to areas they might not otherwise. Maybe you can start out today by just saying a little bit about your company’s overall investment philosophy?
Adam Patti: Sure. Very simply, what we’re trying to do is bring institutional-class investment exposures downstream, and allow everybody to gain access to these types of strategies and different segments of the market that typically they may not have had access to before, and in an inexpensive way.
Some parts of the market are just harder to trade, and harder to get access to. And they really represent the hidden gems in the marketplace. So that’s our goal, and we think by doing that, we’re really serving some value for investors. And we try to keep things inexpensive as well.
Kate Stalter: Do you use managers in house? Or is this a system whereby you use sub-advisors? How does that work?
Adam Patti: No, we’re an index shop, so we really are big believers in indexing, and we apply these index-based methodologies in a couple of different ways.
One way we do it is: We apply more sophisticated, institutional-class investment strategies, like hedge funds, and we try to create hedge-like vehicles for retail investors, where they can benefit from the risk-return profile of hedge funds without having to invest in hedge funds.
We all know the issues around hedge funds.