In This Article:
Andrew Beer, founder of Dynamic Beta Investments, is one of the managers of the $895.5 million iMGP DBi Managed Futures Strategy ETF (DBMF), which was up 21.5% last year when U.S. markets were
down almost as much. Beer recently chatted with ETF.com about what his fund offers investors and what makes it tick.
ETF.com: DBMF was one of the top-performing ETFs last year. What drove that performance?
Andrew Beer: What we do is different from what most people do. Most people you talk to, who have a hedge-fundlike strategy, will tell you, “Our hedge fund strategy is the best; we're the smartest at what we do, etc.”
Ours is very different, and we think there are a lot of really smart hedge funds who do this. But what we're better off doing is figuring out what they're doing and copying it cheaply.
There are 20 hedge funds that we track. Our thesis is that managed futures as a strategy is the single most valuable thing you can put next to a 60/40 portfolio. The problem is there are all sorts of issues in terms of investing in it, and it has been slim pickings in the ETF world for a long time.
What the hedge funds that we track picked up on early—they got the inflation trade early. And they rode it. It was being long crude oil at the right time, being short Treasuries for most of the year, and making money when rates were rising. It was being short the yen when the dollar kept going up. It was a handful of big trades.
ETF.com: Who is investing in DBMF?
Beer: There are a lot of advisors out there who like managed futures in theory but had a lousy experience investing in it.
The reasons are usually one of two things. One is they picked a guy who they thought was great at the time, and then did terribly—single-manager risk, we call it.
The other is that they were trying to hold it through a four- or five-year period when the strategy made zero, net of fees.
In 2015, we set out to solve both those problems. In the last year, the vast majority of our growth was from independent RIAs. It was guys who liked the strategy and could see the diversification benefits, but thought we had, in a sense, built a portfolio and an ETF with their concerns in mind.
The early adopters of the product were all these independent RIAs. So we go from $60 million [and] we're at $900 million right now. But I don't think it's even begun, because the managed futures ETF world is $1.6 billion to $1.7 billion. The mutual fund equivalents are $25 billion, and the hedge funds are $400 billion.
I think what happened is after 2022, we're at this inflection point where managed futures really starts to go mainstream in the ETF world.