New York (HedgeCo.net) – There have been a number of articles written in the last few weeks about liquid alts and how they performed during the month of August. While the funds experienced mixed results, as was the case with the hedge fund industry as a whole, there was a particular article from InvestmentNews that got our attention.

While the article pointed out that gold was one of the best alternative ETFs during the August swoon, it also pointed out that long/short strategies held up well and cited two alt funds that gained ground during the month. What really drew our attention was how the article pointed out that the IndexIQ Hedge Multi-Strategy Tracker ETF (QAI) was down almost 2%, but the article also pointed out that the correlation for the QAI fund was 0.80 and that perhaps it shouldn’t be categorized as an alternative ETF at all.

Looking at the various models on the HedgeCoVest platform, there are five long-only composite models on the platform and only one of the five has a correlation above 0.80. Among the fund manager models, there are five models that employ a long-only strategy and only two of those five have a correlation higher than 0.80. Perhaps InvestmentNews is right and the IndexIQ fund doesn’t really belong in the alternative category.

Rick Pendergraft
Research Analyst
HedgeCoVest