IndexIQ launches multifactor US small cap ETF

May 17th, 2017 | By | Category: Equities

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IndexIQ has launched the IQ Chaikin US Small Cap ETF (Nasdaq: CSML), providing investors with a smart beta investment solution targeting multifactor exposure across US-listed small cap equities. The fund is the first US equity-focused addition to IndexIQ’s family of factor-based investment solutions.

IndexIQ launches multifactor US small cap ETF

Adam Patti, CEO of IndexIQ.

Underlying the ETF is the Nasdaq Chaikin Power US Small Cap Index, which leverages the Chaikin Power Gauge (CPG), a proprietary 20-indicator quantitative stock rating model developed by Marc Chaikin, an investment strategist with 50 years of experience.

The index is usually comprised of between 200 and 350 of the most highly rated stocks derived using the CPG which uses market-based indicators across value, growth, technical and sentiment factors to rank constituents. Stocks are weighted equally within the final composition.

“We are thrilled to be collaborating with IndexIQ and bringing our Chaikin Power Gauge stock rating approach to the ETF marketplace for the first time,” said Marc Chaikin, founder and CEO of Chaikin Analytics. “By combining proven, market-based factors, as we’ve done with our Nasdaq Chaikin Power Indices, it’s now possible for ETF investors to build smarter stock portfolios with the potential to enhance returns across various market cycles.”

IndexIQ’s chief executive officer Adam Patti, said: “We’re very excited to be using the approach pioneered by Marc Chaikin and his colleagues in bringing CSML to market as our first domestic equity, strategic beta ETF.”

Since the index’s inception in April 2014, it has returned 15.2%, significantly higher than the Russell 2000 Index which returned 9.0% over the same period. The largest sector exposures within the index are to financials (29.4%), industrials (23.3%), consumer services (13.5%), technology (11.7%) and consumer goods (10.8%).

Commenting on the potential benefits which investors may find appealing in the fund, IndexIQ’s chief investment officer Salvatore Bruno, said: “Small-cap stocks have historically outperformed their large-cap counterparts over the long-term, and rebounded from market downturns at a quicker pace. Small-caps also tend to be more domestically focused when compared to their multi-national large-cap counterparts, allowing them to be insulated from issues that impact revenues from overseas, such as a rising dollar. Therefore, we believe CSML will fit well as a core US small-cap equity position, as part of the science behind building smarter portfolios for investors.”

The fund has a total expense ratio of 0.35%.

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