With both stocks and bonds under pressure as a result of the U.S.-Iranian war and the risk of 1970s-style stagflation, managed futures strategies are gaining renewed attention as investors seek new sources of income from the markets.
These strategies are typically executed by commodity trading advisors and use systematic models to trade future contracts across various asset classes. Rather than focusing on short-term market movements in traditional asset classes, we aim to capture broader trends that unfold over several months. Managed futures funds will become increasingly important in 2026 due to their ability to adapt to changing market conditions and their performance through 2022.
In 2022, Managed Futures Strategies rose 20% when the S&P 500 index fell about 18% and the Bloomberg U.S. Aggregate Bond Index fell about 13%.
“This is a meaningful outperformance in an environment where stocks and bonds are under pressure,” Novadius President Nate Geraci told CNBC’s “ETF Edge” earlier this week.
Andrew Beer, managing member of DBi, which manages the iMGP DBi Managed Futures Strategy ETF (DBMF), the largest managed futures ETF, said on ETF Edge that the uncertainty surrounding inflation and interest rates, as well as the volatile geopolitical backdrop, lends itself well to a managed futures approach that allows investors to take long or short positions and has the flexibility to respond to various market-wide trends.
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iMGP DBi Managed Futures Strategy ETF performance over the past five years.
Managed futures ETFs remain a relatively small category, with about $6.5 billion in combined assets, according to ETFAction.com. Among them, the iMGP DBi Managed Futures Strategy ETF has attracted about $1 billion in flows this year.
Using a managed futures approach with ETFs allows more investors to access strategies historically associated with the hedge fund world in a more liquid and transparent structure.
“We’re leveraging the activity of the largest hedge funds, and we’re trying to incorporate their activity more efficiently,” Beal said. “We grow by change over three, six, nine, 12 months, not Monday to Thursday,” he said.
“surely, [ETF] The industry plans to launch additional managed futures products along with other hedge fund strategies,” Geraci said on the “ETF Edge” podcast segment.
Geraci said one clear sign that this approach is likely to gain increased interest from retail investors is that three major asset managers – BlackRock, Invesco and Fidelity Investments – are entering the space with private-label managed futures ETFs.
“All of these have entered the market in the past year, and this represents real investor demand going forward,” Geraci said. “The interest is there, especially given the backdrop of this market environment,” he added.
Still, managed futures ETFs are still more complex than regular stock and bond investments, and investors need to understand that while they can outperform stocks and bonds during times of market stress and volatility, they can also lag stocks and bonds.
“I think these are definitely more complex than other types of ETFs on the market,” Geraci said. “Investors and advisors need to have a solid understanding of how these work,” he said. Perhaps most importantly, “investors must be able to stick with managed futures through the inevitable periods of underperformance,” he added.
“They work very well when you need them to, but you have to be able to make them work across market cycles,” Geraci said.
Beer said investors can consider an allocation to this type of strategy in the range of 3% to 5% of their overall market portfolio diversification approach, “just sitting there alongside hard assets and infrastructure.”
“I think we all have the same goal, and that is to help investors grow their wealth while they sleep at night,” he said.
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