ETF Firm Buyout Seen As 'can't Beat Them, Join Them' Move

ETF provider IndexIQ has been purchased by New York Life Insurance Co., with an S&P Capital IQ analyst seeing the deal as a "if you can't beat them, join them" move. New York Life announced the acquisition on Thursday, but the deal's exact terms weren't disclosed. A news release said IndexIQ will be integrated into the giant insurer's investment-management business and marketed through New York Life's Mainstay Investments platform, which currently offers mutual funds. The acquisition is part of a trend in which "many mutual fund providers are losing market share to lower cost ETFs and are taking a number [of] steps to battle back," said Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ, in a note. Index IQ has been viewed as a takeover target for at least a few months, as a report in October said Goldman Sachs was in talks to buy the ETF provider. IndexIQ is a relatively small ETF company in terms of assets, ranking outside the top 20, according to data. Its products include the IQ Merger Arbitrage ETF and the IQ Hedge Multi-Strategy Tracker ETF .

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