Dynamic Beta’s Andrew Beer is enjoying a ‘right place, right time’ moment as his iM DBi Managed Futures ETF (DBMF) has soared in assets from USD60 million to USD1 billion in less than a year, making it the world’s fastest growing ETF.
The fund is 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.
Beer says: “Two years ago, if you had a discussion on managed futures, you would get the reaction: ‘I have heard it all before, it was great in the past but that’s ancient history’. But this year a couple of things are converging.”
Beer believes that wealth management has been taken over by model portfolios, forcing firms to think in terms of asset allocation buckets. “At the end of 2022 every allocator who has been running 60/40 portfolios needs a new playbook and where is diversification?” he asks. “Managed futures. I have been telling people that managed futures are no longer optional but essential.”
Beer says that the interesting thing the early adopters have been independent RIAs, people who have believed in managed futures but wanted a better way to get exposure to the space.
“What Dynamic Beta does is diversify single manager risk by diversifying across a pool of managers. We replicate the average position of a large pool of funds and strip out the fees which means that this year we are up 33 per cent while hedge funds are up 26 per cent. We can deliver 400 basis points per annum of outperformance due to cutting out fees and expenses – it has been a serendipitous conversion of events.
“Managed futures has had its best year on record since the dot com crisis when equities went down and bonds went up or the GFC when equities went down but bonds preserved capital. In this year, in the great unwind of the Bubble Maximus, both stocks and bonds are going down.”