Morningstar’s A.J. D’Asaro provides a quick look at the bronze rated IQ Alpha Hedge Strategy (IQHOX), a mutual fund that attempts to capture the returns of a broad group of hedge funds. As D’Asaro discussed, this fund’s replication process is a bit different than some of the other replication products in the market. Instead of equal weighting different segments of the hedge fund market, IQHOX uses a momentum based approach to track and replicate the sectors that have been performing well.
The strategy can also be obtained through IndexIQ’s ETF, which is the IQ Hedge Multi-Strategy Tracker ETF (QIA). While neither is recommended as a core holding, D’Asaro notes that the funds can be used as a portfolio diversifier.