Banks Take a Break: Consider Managed Futures Under Uncertainty

Markets closed for the day on assurances that major banks were stepping in to provide relief to struggling regional bank First Republic, allaying immediate fears of banking contagion. This provided a brief lull in volatility, but uncertainty and the potential for a banking crisis, both at home and abroad, continue to dominate investors’ concerns, creating a turbulent market environment in which strategies to term managed could take advantage.

Immediate worries about banking contagion appear to be easing as big banks step in to help First Republic, the last regional bank battling stock price capitulation and depositor withdrawals. First Republic was targeting a similar customer base to Silicon Valley Bank and following billions in deposit withdrawals last week, First Republic announced additional funding from the Federal Reserve and JPMorgan over the weekend. which would add $70 billion in funding and liquidity to the beleaguered. bank.

A total of 11 banks have now deposited $30 billion in First Republic Bank, including JPMorgan, Citigroup, Wells Fargo and others, according to the joint press release from the Treasury Department, Federal Reserve, FDIC and OCC as the banking industry struggles to stem the tide of contagion. Whether this is enough to instill confidence among bank customers is uncertain, especially as the risk of uninsured deposits has been highlighted following the collapse of SVB.

treasury secretary Janet Yellen reassured senators today that the Fed will only protect depositors who exceed the FDIC’s $250,000 insurance limit for targeted strategic banks in the event of bankruptcy. These protections will only be provided if “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences,” Yellen said.

Investing for Volatility with Managed Futures

Market volatility has increased in recent days, breaking through the 29 – 30 mark is a marker of extreme volatility – on Wednesday before falling back to 23 on Thursday. Uncertainty about the path of Fed interest rates and the possibility of a real banking crisis should continue to fuel market turbulence in the days and weeks ahead.

Banks Take a Break: Consider Managed Futures Under Uncertainty

THE iMGP DBi Managed Futures Strategy ETF (DBMF) enables the diversification of portfolios on asset classes not correlated to traditional stocks or bonds. It is an actively managed fund that uses long and short positions in the futures market across multiple asset classes: domestic equities, fixed income, currencies and commodities (through its Cayman Islands subsidiary).

The fund’s position in domestically managed futures and futures is determined by the dynamic beta engine, which analyzes the 60-day performance of CTA hedge funds and then determines a portfolio of liquid contracts that would mimic the average performance of the funds speculative (and not the post office).

DBMF is currently down around -9% year-to-date, providing a buying opportunity for advisors and investors looking to add the uncorrelated opportunities that managed futures can provide.

DBMF has a management fee of 0.85%.

For more news, information and analysis, visit the Managed Futures Channel.

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