'Dead money’ for a decade: Why this hedge fund approach may deliver an advantage over bonds — SkimNews
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- Andrew Beer, co-founder and managing member of DBi, told CNBC's 'ETF Edge' that bonds have been 'dead money for the entire decade' and pitched managed futures as a stronger diversifier for traditional 60/40 portfolios.
- Beer helps manage the iMGP DBi Managed Futures Strategy ETF (DBMF), which replicates leading managed futures hedge funds inside a low-cost, liquid ETF; the fund is up almost 19% YTD as of Thursday's close, per FactSet.
- Beer said managed futures ETFs can go long and short across global markets to 'position early against turbulent market events,' something bonds structurally cannot do.
- Beer described 'an existential crisis right now' in strategic asset allocation and the 60/40 model, saying he would not allocate 40% of a portfolio to bonds given their current contribution.
- Nate Geraci, president of NovaDius Wealth Management, countered that fixed income is 'the most challenging area in investing right now' but investors should not 'give up on the bond side of the equation.'
- Geraci warned that managed futures ETFs can outperform during volatile markets but also have periods of underperformance, advising investors to 'let that work out over the long-term' as part of a balanced, diversified sleeve.
Why it matters: DBMF's roughly 19% YTD gain against a decade of anemic bond returns gives Beer's pitch concrete teeth: allocators weighing the 60/40 model's 'existential crisis' now have a liquid, ETF-wrapped vehicle that can short as well as long. Geraci's dissent — that managed futures have their own dry spells — underscores that the swap is not risk-free for investors considering trimming bond exposure.
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