A Refurbished ETF Strategy for Volatile Conditions | ETF Trends

Out with the old and in with the new. ProShares is planning to close a managed futures exchange traded fund but will be replacing it with an actively managed version that could potentially better adapt to volatile market conditions.

The ProShares Managed Futures Strategy (BATS: FUT) began trading Thursday, February 18, according to a press release.

ETF investors who are having a déjà vu moment should not confuse FUT with the ProShares Managed Futures Strategy (NYSEArca: FUTS), which has been trading since October 1, 2014.

With the updated version now on the market, ProShares is planning to shutter FUTS. After the market close, FUTS will no longer accept creation orders – the older managed futures ETF’s price may diverge from its net asset value. The fund will be liquidated by March 21, so anyone still holding onto FUTS shares will automatically have their shares redeemed for cash at the net asset value.

Managed futures strategies have very low, and even negative, correlations to the stock market. They target trends in teh futures market and take long or short positions across a number of asset classes, like commodities, currencies and fixed income. The strategy gained traction after 2008 when the handful of mutual funds in the category and their hedge fund counterparts held up while the rest of the market plunged.

“Managed futures strategies have the potential to deliver positive returns in both rising and falling markets,” Michael L. Sapir, chairman and CEO of ProShare Advisors LLC, said in the press release. “With their low correlation to both stocks and bonds, managed futures strategies can help diversify a stock and bond portfolio.”