IndexIQ Launches IQ MacKay Securitized Income ETF (SECR)
IndexIQ has announced the launch of the IQ MacKay Securitized Income ETF (SECR), a new actively managed fund aimed at providing investors exposure to various income-generating securities, such as mortgage-backed and asset-backed securities. The fund is managed by Neil Moriarty, Michael DePalma, and Zachary Aronson of MacKay Shields' Global Fixed Income Team, known for their experience in managing structured product strategies. The fund seeks to deliver total returns with a focus on current income, leveraging macroeconomic analysis and rigorous security selection. This new ETF aims to offer diversified, potentially higher returns and better risk-adjusted performance, especially in a higher interest rate environment.
- Launch of a new ETF, expanding IndexIQ's product lineup.
- Actively managed fund offers diversified exposure to income-generating securities.
- Managed by experienced team with a track record since October 2019.
- Seeks to provide higher returns and better risk-adjusted performance.
- Designed to benefit in a higher interest rate environment.
- Potential risks associated with the performance of structured products.
- Dependence on the expertise of the MacKay Shields' Global Fixed Income Team.
- Market environment may not favor the fund's strategy, potentially affecting returns.
Insights
The launch of the IQ MacKay Securitized Income ETF (SECR) by IndexIQ is an interesting development for investors seeking diversified exposure to income-generating securities. This fund's focus on various structured products, such as mortgage-backed securities and asset-backed securities, offers a unique angle compared to traditional fixed-income strategies.
SECR's appeal lies in its active management. Unlike passive funds tied to benchmarks like the Bloomberg Aggregate Index, actively managed funds can better navigate complex markets. The team managing SECR brings substantial experience, having managed similar strategies since 2019, which boosts confidence in their ability to achieve outperformance through strategic security selection and macroeconomic analysis.
Given current market conditions where interest rates might remain higher for longer, this fund's emphasis on securitized debt with potentially lower interest rate sensitivity and predictable cash flows is timely. This could attract income-focused investors looking for stability and enhanced risk-adjusted returns.
For retail investors, understanding the intricacies of how securitized products work, especially their cash flow predictability and risk profiles, is essential. Structured products often present higher ratings and diversification benefits, but they require a keen eye for detail in selection to avoid pitfalls related to underlying collateral performance.
The introduction of SECR reflects a larger trend in the market towards seeking alternative income streams, especially in a potentially extended high-rate environment. Securitized products, which include a range of debt instruments backed by financial assets, represent a versatile tool for achieving diversified exposure.
It's important to note that the fund's active management approach allows for nuanced picks, diverging from the rigid allocations seen in many passive funds. This can be beneficial in times of economic uncertainty where flexibility can help in mitigating risks and capturing opportunities.
From a market positioning perspective, IndexIQ is leveraging its established reputation and the expertise of MacKay Shields to cater to a more sophisticated investment audience. This aligns with the growing demand for products that not only offer income but also manage risk effectively. Investors should consider the historical performance and strategies employed by the management team, which seem well-suited to navigate the intricacies of securitized debt.
For the everyday investor, it is also important to recognize the benefits of diversification and the potential for higher income streams that funds like SECR aim to provide. However, understanding the underlying risks and complexities of these securities is equally important to ensure alignment with individual investment goals and risk tolerance.
New fund provides actively managed solution for accessing opportunities across the structured products landscape
SECR is actively managed by Neil Moriarty, Michael DePalma and Zachary Aronson of the MacKay Shields’ Global Fixed Income Team, using an integrated top-down and bottom-up investment process which combines macroeconomic analysis with rigorous security selection seeking to deliver total return with an emphasis on current income. This team has managed structured products strategies since October 2019 and has a track record spanning multiple credit-cycles.
“Most ‘Core’ and ‘Core Plus’ fixed income strategies tend to have allocations to securitized debt closely aligned with the Bloomberg Aggregate Index. With an actively managed approach overseen by the highly experienced portfolio managers on MacKay’s Global Fixed Income Team, SECR seeks a diversified source of potential outperformance and enhanced risk-adjusted return potential,” said Neil Moriarty, Senior Managing Director, Co-Head of Global Fixed Income Team.
“Securitized debt varies greatly across collateral types and structures. MacKay’s Global Fixed Income Team leverages its broad experience to identify opportunities across the universe of structured products that offer diversification benefits, higher ratings, predictable cash flows and, in some cases, lower interest rate sensitivity. If we are in fact in a ‘higher for longer’ rate environment, an approach that underpins SECR can be a very powerful tool for income-focused investors and advisors,” continued Neil Moriarty, Senior Managing Director, Co-Head of Global Fixed Income Team.
“We are excited to bring SECR to market and to further develop the lineup of active ETFs managed by the industry-leading income experts at MacKay Shields,” added Kirk Lehneis, Chief Operating Officer of New York Life Investment Management and President of IndexIQ ETFs. “This fund and so many others in our innovative lineup align with our commitment to delivering thoughtful solutions that meet the evolving needs of investors.”
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 is a New York Life Investments' platform of exchange-traded funds (ETFs) with over a decade of offering highly differentiated and innovative solutions to retail and institutional investors. 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.
About MacKay Shields LLC
MacKay Shields LLC (together with its subsidiaries, "MacKay")*, a New York Life Investments Company, is a global asset management firm with
*MacKay Shields is a wholly owned subsidiary of New York Life Investment Management Holdings LLC, which is wholly owned by New York Life Insurance Company.
** Assets under management (AUM) as of March 31, 2024 represents assets managed by MacKay Shields LLC and its subsidiaries but excludes certain accounts and other assets over which MacKay Shields continues to exercise discretionary authority to liquidate but which are no longer actively managed.
About Risk:
All investments are subject to risk and will fluctuate in value.
Funds that invest in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk which is the possibility that the bond issuer may fail to pay interest and principal in a timely manner. High yield securities generally offer a higher current yield than the yield available from higher grade issues, but are subject to greater market fluctuations, are less liquid and provide a greater risk of loss than investment grade securities. Diversification cannot assure a profit or protect against loss in a declining market. Asset-backed securities are subject to credit risk, extension risk, interest rate risk, liquidity risk and valuation risk. The impairment of the value of collateral or other assets underlying an asset-backed security, such as a result of non-payment of loans or non-performance of underlying assets, may result in a reduction in the value of such asset-backed securities and losses to the Fund. Investments in mortgage-related securities make an investor more susceptible to adverse economic, interest rate, political or regulatory events that affect the value of real estate. Mortgage-related securities are also significantly affected by the rate of prepayments. Impairment of the underlying obligations or collateral, such as by non-payment, will reduce a mortgage-related security’s value.
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, and NYLIFE Distributors LLC is a distributor of the ETFs. NYLIFE Distributors LLC is located at 30 Hudson Street,
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For additional information about IndexIQ, please contact:
New York Life Investments
Sara Guenoun
sara_j_guenoun@newyorklife.com
Craft & Capital
Chris Sullivan
chris@craftandcapital.com
Source: IndexIQ
FAQ
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