NEW YORK--(BUSINESS WIRE)--New York Life Investment Management (NYLIM) is making its first entry into the ETF industry with a high-profile acquisition. NYLIM, the third party global asset management business of New York Life, announced today the signing of a definitive agreement to acquire IndexIQ, the leader in the liquid alternative exchange-traded fund (ETF) industry.1 The combination of these two companies brings NYLIM’s powerful global asset management franchise and distribution platform together with IndexIQ’s proven ability to launch sophisticated alternative ETF products.
Upon closing of the transaction, IndexIQ will be integrated into NYLIM and marketed through New York Life's MainStay Investments platform, opening new doors to investors seeking exposure to alternative investments through ETFs. It will add $1.5 billion to MainStay’s $101 billion in assets under management.
“Our entry into the ETF space is a significant leap forward for New York Life Investment Management and offers remarkable opportunities all around,” said Drew Lawton, Chief Executive Officer, New York Life Investment Management. “Retail and institutional investors are increasingly attracted to ETFs because they offer a cost-effective, transparent way to access investment opportunities across asset classes around the globe. IndexIQ has established itself as a true innovator and market leader offering the next generation of liquid alternative ETFs, and we intend to leverage IndexIQ’s capabilities to become the dominant provider of non-traditional ETF solutions to the market.”
“IndexIQ will partner with our industry-leading MainStay distribution network to deliver its products to a significantly broader audience of retail and institutional investors around the world,” Lawton added. “At the same time, IndexIQ provides a robust ETF platform that New York Life can use to consider new and diverse offerings in the future.”
Among its 12 fund offerings, IndexIQ has established a dominant market leadership position with its IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI). This innovative ETF, with nearly six years of live track-record, aims to replicate the risk-adjusted return characteristics of hedge funds using strategies that include long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, emerging markets and other strategies commonly used by hedge fund managers. IndexIQ also offers a mutual fund version of QAI (Ticker: IQHIX/IQHOX) and is a leading “ETF Strategist” offering ETF Models and Separately Managed Accounts.
“This is a win for IndexIQ, for New York Life, and for investors who need smart solutions to achieve a diverse investment portfolio,” said Adam Patti, Chief Executive Officer and Co-Founder of IndexIQ. “Pairing our innovative history and experience with New York Life’s commitment, resources, and reach positions us to continue our leadership in the ETF marketplace, accelerate our development of both alternative and smart beta solutions, and together revolutionize the industry.”
“Our partnership with New York Life marks a major turning point for IndexIQ and the liquid alternative ETF category,” said David Fogel, President and Co-Founder of IndexIQ. “With the backing of New York Life’s robust investment management business we expect to reach a new universe of institutional and retail clients. We are delighted with this new partnership with New York Life, one of America’s iconic brands and one of the few with triple-A ratings for financial strength.”
The transaction is expected to close in the first half of 2015. Terms of the transaction were not disclosed.
RBC Capital Markets acted as exclusive financial advisor to IndexIQ. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to IndexIQ. IndexIQ has received its primary financial backing from FTV Capital led by Ben Cukier, and James Fields, President at Klingenstein, Fields & Co., both of whom are Board Directors of IndexIQ. Ernst & Young Capital Advisors and WeiserMazars LLP also provided services to IndexIQ in connection with the transaction.
About MainStay Investments
With more than $101 billion in assets under management as of October 31, 2014 across retail mutual funds and variable product sub-accounts, MainStay Investments is the mutual fund distribution arm of New York Life. MainStay provides financial advisors access to a powerful mix of autonomous, institutional investment managers, delivered by people who understand the needs of today's financial advisor. As an indirect subsidiary of New York Life Insurance Company, a Fortune 100 company founded in 1845, MainStay is owned by the largest mutual life insurance company in the United States** and one of the largest life insurers in the world. Please visit www.mainstayinvestments.com for more information.
IndexIQ is a leading issuer of liquid alternative investment solutions focused on absolute return, real asset and international strategies. IndexIQ solutions are offered as ETFs, Mutual Funds, Separate Accounts and Model Portfolios. IndexIQ’s philosophy is to democratize investment management by making innovative alternative investment strategies available to investors in low cost, liquid and transparent products.* Additional information about the company and its products can be found at http://www.indexiq.com/.
About New York Life
New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States** and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings currently awarded to any life insurer from all four of the major credit rating agencies: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+).*** Headquartered in New York City, New York Life offers life insurance, retirement income, investments and long-term care insurance through our family of companies. New York Life Investments**** provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as retail mutual funds. Please visit www.newyorklife.com for more information.
*IndexIQ’s ETF holdings are available daily on IndexIQ’s website. Brokerage commissions apply to ETFs. ETFs are liquid in that they are exchange-traded.
**Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, 6/16/14. For methodology, please see http://fortune.com/fortune500/.
***Individual independent rating agency commentary as of 8/13/14.
****New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC.
1 Source: As of 11/14/14, IndexIQ ranked the largest provider in terms of assets under management of Alternative ETFs as classified by ETFDB.com.