ETF and hedge fund industry disruptor Andrew Beer of Dynamic Beta is enjoying 2022, with his US iM DBi Managed Futures Strategy ETF, DBMF, up 21 per cent year to date.
The fund, part of Dynamic Beta’s hedge fund replication strategy range, represents Beer’s passionate views that hedge fund replication strategies are the only way to go forward for investors who want hedge fund like returns combined with low fees.
Dynamic Beta is part of the iMGlobal Partner Group, a Paris-headquartered multi-boutique firm that takes minority stakes, typically of between 20 and 40 per cent in asset managers. Jamie Hammond, Deputy CEO and head of EMEA for the firm explained in an overview of distribution trends in the asset management industry, that distribution dynamics have changed and evolved over the last 20-odd years for asset managers.
He describes client segments now in terms of the FANGS, as in Google, based on data; Amazon, understanding individual investors, whether retail or institutional, as individuals and finally, Netflix, examining how the clients consume content and information.
“The bigger the firm, the harder it is to get that co-ordination,” he says. “A good active story can command a price.” And it is here, with Beer’s truly active story within the IMGP model where he landed in 2018.
The index revolution has finally come to hedge funds, Beer says, detailing the long history of the hedge fund industry and, particularly for DBMF, the managed futures industry which has been breaking hearts with on again/off again performance since the middle of the last century.
His model for DBMF replicates managed futures returns and this year is seeing one of its glory phases, with DBMF, replicating the SG CTA Hedge Fund Index, pre-fees, outperforming its underlying index and enjoying that 21 per cent year to date return.
The firm also runs Ucits products in Europe, exposed to Beer’s DBi, which has one of the longest live track records in the hedge fund replication space, with the launch of its first product in 2007.
DBi manages three core strategies that seek to replicate the pre-fee performance of portfolios of hedge funds in the Managed Futures, Equity Long/Short and Multi-Strategy (Equity Long/Short, Relative Value and Event-Driven) categories. Not all hedge fund strategies can be replicated, Beer warns, saying that replication won’t work in the PE-like distressed managers or merger arbitrage sectors.
Beer also manages the SEI Liquid Alternative Fund, described as hedge fund alpha combined with the client-friendly features of a multi-asset fund.
Wealth management is changing, Beer says. “Wealth managers have turned into financial advisers.” And with bigger claims on their time managing their clients, wealth managers are looking for simpler portfolios, he says, and certainly current challenging market conditions are perfect for his type of product which has a low correlation with equity returns.