IndexIQ garnered a lot of attention with its latest ETF launch, the IQ ARB Merger Arbitrage ETF. The firm is premised on the idea that ETFs and mutual funds can replicate various hedge fund strategies and thus deliver the same returns at much lower cost.

A host of other firms have jumped into this niche, notes Business Week. The list includes AlphaSimplex Group, iShares, Wisdom Tree and Goldman Sachs. The idea has been around for a while, though ETFs that aim to replicate various hedge fund indexes have gotten most of the media coverage.

It seems that the financial advisor community is slowly coming around to the idea of adding alternatives to client portfolios. One emerging marketing point is the need for diversification beyond long stocks and bonds. If this line of thinking becomes the conventional wisdom, which it may, it would have profound consequences for the asset management industry. Frankly, it would be great for businesses. Will we see these products in 401k plans soon?

For more:
- here's the Business Week article

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