Markets Drop on JOLTS Report: Invest for Volatility With DBMF

Markets may be finally shaking the year-long trend of bad economic news is good news for markets with the release of February’s JOLTS report on Tuesday that revealed job openings dropping at a more rapid rate than expected. Markets closed for the day, ending a four-day winning streak as volatility continues, extending an environment in which managed futures strategies like the iMGP DBi Managed Futures Strategy ETF (DBMF) can offer diversification and volatility mitigation potential.

February’s job openings dropped 632,000 to 9.93 million on expectations of 10.4 million, the first time job openings have been below 10 million since May 2021, reported CNBC. It could be a signal that the Fed’s aggressive monetary policy and fight against inflation are bearing fruit, squeezing the jobs market and further slowing the economy, and markets dropped as investors mulled over a recession.

“The Fed could consider pausing rate hikes at the next meeting but only if the upcoming employment report shows signs of material weakness and the March [consumer price index] report reveals lower inflation,” Jeffrey Roach, chief economist at LPL Financial, told CNBC.

As Recession Looms, Diversify With DBMF

The iMGP DBi Managed Futures Strategy ETF (DBMF) allows for the diversification of portfolios across asset classes uncorrelated to traditional equities or bonds. It is an actively managed fund that uses long and short positions within the futures market on several asset classes: domestic equities, fixed income, currencies, and commodities (via its Cayman Islands subsidiary).

The fund’s position within domestically managed futures and forward contracts is determined by the Dynamic Beta Engine, which analyzes the trailing 60-day performance of CTA hedge funds and then determines a portfolio of liquid contracts that would mimic the hedge funds’ averaged performance (not the positions).

DBMF is currently down about -10.65% YTD, providing a buying opportunity for advisors and investors looking to add the non-correlated opportunities that managed futures can provide. The fund is currently long one-year Treasuries, MSCI EAFE, and gold, and is short all of its other holdings which include the S&P 500, crude oil, the yen, emerging markets, and various Treasuries.

DBMF has management fees of 0.85%.

For more news, information, and analysis, visit the Managed Futures Channel.