A hedge fund-mimicking ETF that surfs trends across assets has just passed a fresh milestone as it trounces peers in 2022’s inflation-driven market maelstrom.
The iM DBi Managed Futures Strategy ETF (ticker DBMF) began 2022 with just $60 million in assets, but now boasts more than $1 billion after a consistent run of inflows stretching back 19 months, according to Bloomberg data.
The product, which replicates the strategies of trend-following hedge funds, has returned 33% so far this year amid prolonged moves in a host of assets as the Federal Reserve ramps up interest rates to combat runaway inflation.
So-called managed futures strategies take both long and short positions across a slew of derivatives seeking to ride price momentum and clear market trends. The cohort is thriving this year amid the ongoing fallout from the Fed’s tightening campaign.
The combination of flows and price jump means DBMF’s assets have now swelled more than 1,500% this year. That makes it the fastest-growing ETF with more than $50 million in assets, according to Bloomberg Intelligence’s Athanasios Psarofagis.
“What managed futures got right this year was inflation,” said Andrew Beer of Dynamic Beta Investments, the co-manager of DBMF. “They were long crude oil at the right time, short Treasuries at the right time, and long the dollar at the right time.”
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Actively managed DBMF lured $39 million in the latest session for which data are available. That was the third-largest inflow on record for the three-year-old fund, and took net inflows in 2022 to $893 million.
DBMF’s success comes as a traditional balanced portfolio that allocates 60% to equities and 40% to bonds heads for its worst year in over a decade — sending investors in search of alternative hedges.
While none match DBMF’s popularity, other trend-following ETFs are also attracting cash. The First Trust Managed Futures Strategy ETF (FMF) has lured inflows of $131 million as it returned about 15% so far in 2022. The Simplify Managed Futures Strategy ETF (CTA), which launched in March, has returned 17% since its debut and gathered about $178 million in assets.
“Everything has come together this year for managed futures,” said Beer. “We are very, very pleasantly surprised by the rate of asset growth this year, but we really think it’s just the beginning.”
This article was provided by Bloomberg News.
