This Managed Futures ETF Becomes First to Be Rated Five Stars

Managed futures have proven their value this year, performing strongly at a time when equities and bonds have both struggled, adding diversification and some fairly significant returns to portfolios in the first half of the year.

When it comes to managed futures ETFs, the iMGP DBi Managed Futures Strategy ETF (DBMF) continues to sit head and shoulders above the competition. Shortly on the heels of becoming a four-star fund, DBMF is now a five-star Morningstar-rated ETF, the highest-rated managed futures ETF on the market.

“For fifteen years, allocators heard from hedge funds and mutual funds said that it was impossible to run a good hedge fund strategy in an ETF.  We hope DBMF changes their minds,” Andrew Beer, co-portfolio manager of DBMF and managing member at Dynamic Beta investments, the fund’s sub-advisor, said in a communication to VettaFi.

The “crisis alpha” that managed futures can offer during times of market volatility has been popular with investors in 2022, with managed futures strategies seeing steady inflows in the first half of 2022 and offering some significant returns. DBMF has net inflows of $353.47 million year-to-date as investors have flocked to the fund that offers hedge fund performance in an ETF wrapper with a year-to-date return of 23.14%, according to the fund’s website.

“In DBMF, we seek to outperform in the most straightforward way: through lower costs. This forms the cornerstone of our ‘index-plus’ philosophy,” explained Mathias Mamou-Mani, co-portfolio manager of DBMF and managing member at Dynamic Beta investments.

Within the broad Morningstar Alternatives category, DBMF is now one of only two funds with five stars; the other is the Innovator U.S. Equity Buffer ETF – October (BOCT), which uses options to buffer losses up to 9% within the S&P 500 but also caps upside performance should markets turn around. Globally, there are a total of only 35 ETFs that have a star rating within the broad alternatives category with Morningstar.

DBMF is designed to capture performance regardless of which direction equity markets are moving and adds diversification for portfolios because of its lack of correlation to both traditional equities and bonds. It is an actively managed fund that uses long and short positions mostly via futures contracts and forward contracts; these contracts span domestic equities, fixed income, currencies, and commodities (via its Cayman Islands subsidiary).

The fund is a unique one within managed futures ETFs in that it seeks to replicate the average performance of the top 20 managed futures hedge funds, offering better alpha capture through fee reductions that an ETF provides.

“We are proud to see the iMGP DBi Managed Futures Strategy ETF (DBMF) achieve a 5-star rating and be the sole managed futures ETF to be rated 5 stars by Morningstar. Three plus years ago our clients – institutions, wealth advisors and discretionary model allocators were seeking a smarter solution to traditionally expensive, single manager mutual funds. It is clear that DBMF and its subadvisor (Dynamic Beta investments) replication process provides this solution to access managed futures in a actively managed, low cost, and broadly diversified approach,” said Jeff Seeley, CEO of iM Global Partner Fund Management and Litman Gregory Wealth Management and deputy CEO of US iM Global Partner, in a communication to VettaFi.

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