IQ MacKay ESG High Income ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The portfolio management team earns the strategy an Average People Pillar rating. However, there could be stronger efforts on the team's behalf to align interests with shareholders through personal investments. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight B rated bonds and has a significant underweight in debt with one- to three-year maturities compared with category peers. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. IQ MacKay ESG High Income ETF earns an Average Process Pillar rating.    The most significant contributor to the rating is the firm's five-year retention rate of 87% over the period. A low expense ratio, with fees ranking in its category's cheapest 20%, also influences the rating. Expenses reduce net returns and are one of the most reliable predictors of future performance. Lastly, the process is limited by its parent firm's inferior risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.8 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 Compared with other funds in the High Yield Bond Morningstar Category, this fund's cash position and interest-rate sensitivity are historically in line with peers over the past few years. 

 This strategy's 12-month yield is 7.0%, higher than its average peer's 6.4%. Typically, higher yields come at the cost of higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated B.

Average

Process

IQ MacKay ESG High Income ETF earns an Average People Pillar rating. The main contributor to the rating is the strategy's fees, which rank in its category's cheapest quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. The parent firm's five-year success ratio of 44% also supports the rating. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. Their respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the rating is limited by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.


Eric Gold brings seven years of listed portfolio management experience to the team. They are currently not managing any other investment vehicles, with their focus devoted to this strategy. Eric Gold draws on only one other listed manager. Together, they are adequately equipped with seven years of average listed portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

People

New York Life Investments' collection of autonomous investment boutiques will have a new leader in May 2023, and it will take time to assess his impact. The firm keeps its Average Parent rating.
New York Life, the insurance giant that owns NYL Investments, tapped Naïm Abou-Jaoudé to be the asset manager's CEO after the previous CEO departed. Abou-Jaoudé inherits a firm that has grown by building internally and through acquisition. The firm offers mandates in partnership with 13 different asset managers--eight of which are wholly or partially owned affiliates – through several global outlets. Most U.S. funds fall under the established MainStay brand, whereas IndexIQ oversees a growing lineup of ETFs managed both internally and by other affiliates. Candriam, at which Abou-Jaoudé has been CEO even prior to its 2014 acquisition by NYL Investments, takes the lead in Europe through its own offerings and through those subadvised by other boutiques.
Plenty of these capabilities are compelling, with Candriam and fellow affiliates MacKay Shields and Ausbil sporting standout teams in several wheelhouses. Yet many of the boutiques have also struggled with managing bloated lineups or with improving lagging teams. NYL Investments hasn't shied from changing subadvisors or merging platforms and doesn't have a spotless record of managing capacity or of avoiding trendy offerings.

Parent

IQ Mackay ESG High Income ETF

IQHI is an actively managed fund that provides broad exposure to high-yield corporate bonds of various maturities from around the world that meet environmental, social, and corporate governance criteria.

The credible sustainable bond universe is gradually increasing, and that could support the related exchange traded funds, including those addressing high yield debt.

Sustainable Bond Outlook Could Be Supportive of This ETF

It's a new year and perhaps that will mean better things for bonds and bond ETFs, including high-yield corporate fare. As things stood on Thursday, January 26, the widely followed Markit iBoxx USD Liquid High Yield Index is higher by nearly 4% year-to-date.

Climate Warms for This ESG Bond ETF

High yield corporate debt slipped last year as Treasury yields spiked amid the Federal Reserve's rising rates regime. This year, there's concern that a recession will weigh on the junk bond space, potentially creating a wave of defaults.

Investigate IQHI if Junk Bond Environment Improves

IQ Candriam ESG US Mid Cap Equity ETF

Equity, debt funds tap into rising demand for sustainable investments.

IndexIQ Adds Pair of ESG-Focused ETFs

IndexIQ has launched two new ESG-focused exchange-traded funds on the NYSE Arca today: the IQ MacKay ESG High Income ETF (NYSE Arca: IQHI) and the IQ Candriam ESG U.S. Mid Cap Equity ETF (IQSM).

IndexIQ Adds 2 New Funds to Its ESG ETF Suite

IndexIQ, a leading provider of innovative multi-asset investment solutions, today announced the launch of two new additions to the firm's fast-growing lineup of ESG investment solutions: the IQ MacKay ESG High Income ETF (IQHI) and the IQ Candriam ESG U.S. Mid Cap Equity ETF (IQSM).

News for IQ Mackay ESG High Income ETF ETF (IQHI)