Investors are reevaluating their bond allocations in light of emerging strategies, particularly managed futures, as suggested by Andrew Beer, co-founder of DBi. Speaking on CNBC’s "ETF Edge," Beer noted that bonds have essentially underperformed for the past decade. He advocates for managed futures as a dynamic addition to traditional 60/40 portfolios, claiming that this strategy provides better balance against stocks, especially during volatile market conditions driven by concerns over debt and advancements in artificial intelligence.
Managed futures involve exchange-traded funds (ETFs) that can take long and short positions in global markets, allowing for early positioning against market turbulence. Beer emphasized that investors need assets that correlate minimally with stocks and bonds while performing well in crisis scenarios. He highlighted the iMGP DBi Managed Futures Strategy ETF (DBMF), which mirrors the performance of top managed futures hedge funds but offers a more cost-effective and liquid investment option.
While Beer champions managed futures, other experts, like Nate Geraci of NovaDius Wealth Management, argue that bonds still play an essential role in a diversified portfolio. Geraci described the current environment for fixed income as complicated and emphasized that alternatives should complement, rather than replace, traditional assets. He cautioned that while managed futures may excel in volatile markets, they could also experience periods of underperformance, underscoring the importance of maintaining a balanced portfolio.
Why this story matters
- Highlights a shift in investment strategy amid ongoing market volatility.
Key takeaway
- Managed futures offer a potential alternative to bonds for risk management in portfolios.
Opposing viewpoint
- Bonds remain crucial for diversification and should not be completely abandoned.
