The debt ceiling turmoil should soon be over, leaving investors to focus on positioning and H2 trends. For those looking to boost uncorrelated returns amid second-half economic challenges, the iMGP DBi Managed Futures Strategy ETF (DBMF) is a fund to consider.
Congress adjourned for its Memorial Day recess Thursday afternoon without a resolution on the debt ceiling. The S&P 500 and Nasdaq both jumped on Nvidia’s record single-day stock market gains. However, other stock indices closed amid continued market uncertainty and turmoil over the long weekend.
This is the latest pressure point in a series of market stressors this year that continue to keep investor uncertainty high. This uncertainty equates to market turmoil and prevents any emerging trends from forming in the wake of regional banking crashes.
Many managed futures strategies – which invest in the trend of assets against their expected performance – fell following the collapse of regional banks in March. The DBMF is down 7.9% as of 5/25, falling sharply in March but partially recovering in the weeks that followed.
See also: “A historical overview of managed futures returns and performance“
Capture Emerging H2 Trends with DBMF
As the debt ceiling turmoil and banking sector concerns fade, managed futures strategies are poised to capture emerging trends in the second half. The dynamic nature of inflation and rates means that many of the inflation-based trends the strategy capitalized on last year have evaporated this year.
The DBMF enables the diversification of portfolios on asset classes not correlated to traditional stocks or bonds. The actively managed fund uses long and short positions within the futures market across multiple asset classes. These include domestic equities, fixed income, currencies and commodities (through its Cayman Islands subsidiary).
The fund’s position in nationally managed futures and futures contracts is determined by the Dynamic Beta Engine. The DBE analyzes the 60-day performance of CTA hedge funds. It then determines a portfolio of liquid contracts that would mimic average hedge fund performance (not positions).
DBMF takes long positions in derivatives with exposures to asset classes, sectors or markets that are expected to grow in value. The fund also takes short positions in derivatives with exposures that are expected to fall in value.
DBMF has a management fee of 0.85%.
For more news, information and analysis, visit the Managed Futures Channel.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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