IndexIQ Announces Updates and Enhancements to Its IQ Real Return ETF “CPI”

Rhea-AI Summary

IndexIQ has announced that, effective February 28, 2022, the IQ Real Return ETF (CPI) will track the Bloomberg IQ Multi-Asset Inflation Index to enhance inflation exposure for investors. This change comes amid rising inflation concerns, which have reached levels not seen in 39 years. Additionally, the management fee for the ETF will be reduced from 0.48% to 0.29%, positioning it competitively in the inflation-focused ETF market. The aim is to provide a diversified hedge against inflation through various asset types, including Treasury Inflation-Protected Securities (TIPS) and commodities.

Positive

• Reduction of the management fee from 0.48% to 0.29%, increasing competitiveness.
• New strategy focuses on the Bloomberg IQ Multi-Asset Inflation Index to enhance inflation exposure.

Negative

• None.

The fund will lower its management fee and begin tracking a new Bloomberg inflation-tied index to better reflect the market environment and evolving inflationary landscape

NEW YORK--(BUSINESS WIRE)-- IndexIQ today announced that effective February 28, 2022, the IQ Real Return ETF (ticker: CPI) will begin tracking the Bloomberg IQ Multi-Asset Inflation Index in a new relationship with Bloomberg Index Services Limited. IndexIQ believes it is an opportune time to modify the CPI ETF’s strategy with the goal to provide investors with better inflation exposure.

Under these changes, the Fund will aim to provide investors with a hedge against the inflation rate by providing diversified exposure to assets that have historically exhibited positive sensitivity to the Consumer Price Index, or CPI.¹ The Bloomberg IQ Multi-Asset Inflation Index is comprised of U.S. Treasury Inflation-Protected Securities (TIPS) of short-, intermediate-, and long-term maturities, U.S. large capitalization equity securities, and commodities, which may include direct exposure to commodities or exposure through pooled vehicles or derivative instruments.

Additionally, at the time of the Fund’s change to the Bloomberg index, the management fee will decrease from 0.48% to 0.29%, making it one of the more competitively priced inflation-focused ETFs on the market.²

Salvatore Bruno, Chief Investment Officer of IndexIQ said:

"The risk of inflation is heavily increasing with November’s Consumer Price Index jumping at a level not seen in 39 years. The Fed is reacting to this and other data and could very well plan to taper more going forward. Undoubtedly this is a growing concern of most investors, and we want to ensure investors have the tools they need to better manage their portfolios against inflation. The new approach that will underpin our CPI ETF is a powerful building block in the battle against the corrosive effects of inflation, and we’re pleased to be announcing these changes.”

Ian Forrest, Head of IndexIQ said:

“We’re excited about leveraging the capabilities and expertise of Bloomberg’s Index team to better position CPI to better fit investors’ portfolios. There has been a lot of change in the economy and market since we launched the CPI ETF 12 years ago and we believe these adjustments make the fund one of the more unique and appealing options available for any investor or advisor trying to manage portfolios against inflation.”

For more information on the fund and on IndexIQ’s full suite of ETF offerings, as well as insights and commentary on inflation and the current market environment, 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 $4.9 billion in assets under management as of September 30, 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 newyorklifeinvestments.com/etf or follow us on Twitter or LinkedIn.

Disclosures:
Debt Securities Risk
In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible

Commodities Risk
Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities, and exposure to commodities, directly or through other securities, can cause the value of the Fund’s assets to decline or fluctuate in a rapid and unpredictable manner.

Derivatives Risk
Derivatives often involve a high degree of financial risk in that a relatively small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable as well as favorable, in the price of the derivative instrument. Investments in derivatives may increase the volatility of a fund’s net asset value and may result in a loss to the fund.

Inflation-Protected Security Risk
The value of inflation-protected securities, including TIPS, generally will fluctuate in response to changes in “real” interest rates, generally decreasing when real interest rates rise and increasing when real interest rates fall.

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.

Bloomberg Index Services Limited serves as the index provider for the New Index. An investment cannot be made in an index. The New Index seeks to provide investors with a hedge against the inflation rate by providing diversified exposure to assets that have historically exhibited positive sensitivity to the Consumer Price Index, or CPI. The New Index is comprised of U.S. Treasury Inflation-Protected Securities (TIPS) of short-, intermediate-, and long-term, U.S. large capitalization equity securities and commodities, which may include direct exposure to commodities or exposure through pooled vehicles or derivative instruments.

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.

"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. 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.

1923994

“Bloomberg®” and Bloomberg IQ Multi-Asset Inflation Index are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the index (collectively, “Bloomberg”) and have been licensed for use for certain purposes by Bloomberg IQ Multi-Asset Inflation Index. Bloomberg is not affiliated with IndexIQ Advisors LLC, and Bloomberg does not approve, endorse, review, or recommend IQ Real Return ETF. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to IQ Real Return ETF.

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1} The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.
² IndexIQ the Advisor has contractually agreed to waive a portion of the management fee equal to 0.06% of the Fund’s average daily net assets until August 31, 2022.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211217005095/en/

Allison Scott / Sara Guenoun

New York Life Investments

Allison_scott@nylim.com / sara_j_guenoun@newyorklife.com

Chris Sullivan / Julia Stoll

MacMillan Communications

chris@macmillancom.com / julia@macmillancom.com

Source: IndexIQ

FAQ

What changes are being made to the IQ Real Return ETF (CPI) in February 2022?

The IQ Real Return ETF (CPI) will start tracking the Bloomberg IQ Multi-Asset Inflation Index and will reduce its management fee from 0.48% to 0.29%.

How does the new Bloomberg IQ Multi-Asset Inflation Index benefit investors?

The index aims to provide diversified exposure to assets historically sensitive to inflation, including TIPS and commodities, helping investors hedge against rising inflation.

Why is IndexIQ changing its CPI ETF strategy now?

IndexIQ is responding to increasing inflation concerns, with the Consumer Price Index reaching levels not seen in 39 years, prompting the need for better inflation management tools.

When will the management fee for the CPI ETF change?

The management fee will decrease effective February 28, 2022.

What assets does the new Bloomberg index include?

The Bloomberg IQ Multi-Asset Inflation Index includes U.S. Treasury Inflation-Protected Securities, U.S. large capitalization equities, and commodities.