Key Takeaways
- • First Trust has secured a European passport for its US-listed Managed Futures Strategy Fund (FMF) under the Alternative Investment Fund Managers Directive (AIFMD), making it available to professional investors in certain European jurisdictions including the UK.
- • FMF, a $153.6 million actively managed ETF listed on NYSE Arca, carries a 1.01% total expense ratio and employs long and short positions across asset classes using futures contracts to target absolute returns.
- • The passporting represents the first European distribution of a managed futures ETF since JP Morgan Asset Management's fund closure in 2020, addressing institutional demand for diversification strategies in multi-asset portfolios.
- • Managed futures ETFs in the US total $2.7 billion across seven products, with additional filings from BlackRock and Invesco pending SEC review, indicating sector growth momentum.
- • First Trust's strategy likely targets both institutional European demand and overseas US citizens unable to hold European UCITS funds under US tax law, while tapping into North American fund managers' preference for passporting as a capital-raising method.
Summary
First Trust has expanded its product distribution footprint by passporting its US-listed Managed Futures Strategy Fund (FMF) to Europe under regulatory framework established by the Alternative Investment Fund Managers Directive (AIFMD). The fund, listed on NYSE Arca with $153.6 million in assets under management, is now accessible to professional investors in select European jurisdictions, including the United Kingdom. FMF operates as a Cayman-domiciled alternative investment fund structured to pursue an absolute return mandate through active management of long and short positions across multiple asset classes via futures contracts, with a total expense ratio of 1.01%.
The passporting action marks a significant reopening in the European managed futures ETF landscape. Since JP Morgan Asset Management shuttered its Europe-domiciled managed futures ETF in 2020, institutional investors have lacked direct access to this strategy through an ETF wrapper within the region. The fund's European availability comes as investors increasingly seek non-correlated diversifiers for multi-asset portfolios, creating renewed institutional appetite for managed futures exposure.
First Trust's move aligns with broader industry trends toward European expansion. Paul Spendiff, head of business development at Ocorian, noted "strong appetite" among North American fund managers to raise capital in Europe, with many concluding that passporting represents the "most attractive" distribution methodology. Peter Sleep, investment director at Callanish Capital, highlighted an additional rationale: reaching overseas US citizens who face tax impediments to holding European UCITS funds.
The managed futures ETF sector demonstrates growth potential in the US market, where $2.7 billion in assets are distributed across seven products including FMF. BlackRock and Invesco have additional managed futures ETF filings under SEC review, suggesting competitive intensity and institutional validation of the strategy category. FMF's European passport positions First Trust to capture institutional demand during what may be an inflection point in the sector's maturation.
The passporting action marks a significant reopening in the European managed futures ETF landscape. Since JP Morgan Asset Management shuttered its Europe-domiciled managed futures ETF in 2020, institutional investors have lacked direct access to this strategy through an ETF wrapper within the region. The fund's European availability comes as investors increasingly seek non-correlated diversifiers for multi-asset portfolios, creating renewed institutional appetite for managed futures exposure.
First Trust's move aligns with broader industry trends toward European expansion. Paul Spendiff, head of business development at Ocorian, noted "strong appetite" among North American fund managers to raise capital in Europe, with many concluding that passporting represents the "most attractive" distribution methodology. Peter Sleep, investment director at Callanish Capital, highlighted an additional rationale: reaching overseas US citizens who face tax impediments to holding European UCITS funds.
The managed futures ETF sector demonstrates growth potential in the US market, where $2.7 billion in assets are distributed across seven products including FMF. BlackRock and Invesco have additional managed futures ETF filings under SEC review, suggesting competitive intensity and institutional validation of the strategy category. FMF's European passport positions First Trust to capture institutional demand during what may be an inflection point in the sector's maturation.
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