The S&P 500 and Nasdaq both closed down 1% in trading Tuesday as debt ceiling talks continued. For investors looking for price opportunity and trend capture as the economy slows, look to the iMGP DBi Managed Futures Strategy ETF (DBMF).
Negotiations for a resolution to the debt ceiling by June 1 continue to drag on in Washington. Yields in the 10-year and 30-year Treasury continue to climb while sectors like consumer staples, utilities, and energy fall.
“Rates have continued to show some life over the last few weeks,” Chris Veronne, head of technical and macro research at Strategas Securities, told CNBC. “With upward pressure on yields has come downward pressure to Staples and Utilities both of which traded to multi month relative performance lows.”
The volatility and shifting of sectors and rising and falling Treasury yields reflect wider investor and market uncertainty. No clear trends have emerged, and concerns of the debt ceiling have thrown markets into a relative holding pattern for the time being.
Looking ahead to the second half of the year, economic slowing and recession are likely to drive prolonged trends. Managed futures strategies remain positioned to capture any emerging trends, but for now prolonged uncertainty remains a challenge. It also creates an opportunity to capture the strategy at attractive prices.
Capitalize on Price Opportunities in Managed Futures
The iMGP DBi Managed Futures Strategy ETF (DBMF) allows for the diversification of portfolios across asset classes uncorrelated to traditional equities or bonds. The actively managed fund uses long and short positions within the futures market on several asset classes. These include domestic equities, fixed income, currencies, and commodities (via its Cayman Islands subsidiary).
DBMF is currently down 8.14% YTD and is above its 50-day simple moving average (SMA) but remains below its 200-day SMA.
The fund’s position within domestically managed futures and forward contracts is determined by the Dynamic Beta Engine. The DBE analyzes the trailing 60-day performance of CTA hedge funds. It then determines a portfolio of liquid contracts that would mimic the hedge funds’ averaged performance (not positions).
DBMF takes long positions in derivatives with exposures to asset classes, sectors, or markets that are anticipated to grow in value. The fund also takes short positions in derivatives with exposures expected to fall in value.
DBMF has management fees of 0.85%.
For more news, information, and analysis, visit the Managed Futures Channel.