Key Takeaways
- • DBi co-founder Andrew Beer argues investors should rethink heavy bond allocations and consider managed futures as a tactical diversifier, describing bonds as "dead money" over the past decade, according to CNBC.
- • The iMGP DBi Managed Futures Strategy ETF (DBMF) was up almost 19% year-to-date as of the Thursday close, per FactSet data cited in the report.
- • Managed futures ETFs can take both long and short positions across global markets, a toolset Beer says traditional fixed income lacks, particularly for low correlation to stocks and bonds in crises.
- • NovaDius Wealth Management president Nate Geraci contends alternatives should complement, not replace, bond allocations, warning that strong performance in volatile markets can be followed by weaker stretches.
- • The debate highlights pressure on the traditional 60/40 portfolio model, with Beer calling it an "existential crisis" in strategic asset allocation.
Summary
Investors are reassessing the role of bonds in balanced portfolios as market volatility rises around debt concerns and the artificial intelligence trade, according to a report from Traders Union based on CNBC coverage. Managed futures, a hedge fund strategy now accessible through exchange-traded funds, are being positioned as a more flexible diversifier for stock-heavy allocations.
Andrew Beer, co-founder and managing member of DBi, says investors should rethink heavy bond allocations. He argues that bonds have been "dead money" for the past decade and that managed futures offer a tactical approach that can respond more effectively when markets turn volatile. Beer contends the strategy, once largely confined to hedge funds, can hedge equity exposure better than bonds because it is designed to move across asset classes and react early to turbulent events. He says investors need assets with low correlation to both stocks and bonds, particularly during crises, and describes managed futures as one of the strongest hedge fund approaches for that purpose. Beer helps manage the iMGP DBi Managed Futures Strategy ETF (DBMF), which according to DBi's website seeks to replicate the performance of leading managed futures hedge funds in a low-cost, liquid ETF structure. FactSet data show DBMF was up almost 19% year-to-date as of Thursday's close.
Nate Geraci, president of NovaDius Wealth Management, offers a more balanced view. He says bonds still have a place in diversified portfolios even as fixed income becomes harder to position, and that alternatives belong alongside stocks and bonds rather than as a full substitute for the bond allocation. Geraci cautions that investors should understand how managed futures ETFs interact with the rest of a portfolio, since periods of strong performance in volatile markets can be followed by weaker returns. In his view, the case for alternatives rests on long-term diversification rather than abandoning fixed income.
The discussion reflects broader pressure on the traditional 60/40 portfolio, which allocates 60% to stocks and 40% to bonds. Beer characterizes the situation as an existential crisis in strategic asset allocation, while Geraci argues the answer lies in portfolio balance rather than abandoning bonds.
Andrew Beer, co-founder and managing member of DBi, says investors should rethink heavy bond allocations. He argues that bonds have been "dead money" for the past decade and that managed futures offer a tactical approach that can respond more effectively when markets turn volatile. Beer contends the strategy, once largely confined to hedge funds, can hedge equity exposure better than bonds because it is designed to move across asset classes and react early to turbulent events. He says investors need assets with low correlation to both stocks and bonds, particularly during crises, and describes managed futures as one of the strongest hedge fund approaches for that purpose. Beer helps manage the iMGP DBi Managed Futures Strategy ETF (DBMF), which according to DBi's website seeks to replicate the performance of leading managed futures hedge funds in a low-cost, liquid ETF structure. FactSet data show DBMF was up almost 19% year-to-date as of Thursday's close.
Nate Geraci, president of NovaDius Wealth Management, offers a more balanced view. He says bonds still have a place in diversified portfolios even as fixed income becomes harder to position, and that alternatives belong alongside stocks and bonds rather than as a full substitute for the bond allocation. Geraci cautions that investors should understand how managed futures ETFs interact with the rest of a portfolio, since periods of strong performance in volatile markets can be followed by weaker returns. In his view, the case for alternatives rests on long-term diversification rather than abandoning fixed income.
The discussion reflects broader pressure on the traditional 60/40 portfolio, which allocates 60% to stocks and 40% to bonds. Beer characterizes the situation as an existential crisis in strategic asset allocation, while Geraci argues the answer lies in portfolio balance rather than abandoning bonds.
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