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NEWSLETTER

Sandeep Rao, Leverage Shares

ETF Express newsletter 5.11.21

I have had a soft spot for managed futures since the 1990s when I published Managed Futures – An Investor’s Guide with John Wiley. At the time, I was interviewing emerging hedge fund managers and managed futures managers for Managed Account Reports. The managed futures managers had had their day in the sun in the late 1980s and their continued performance was increasingly being led by the Man Group, whose roots lie in the systematic trading model. 

Other firms I spoke to at the time practiced trend-following among the commodities markets using the Fibonacci series, the shape that bullets make coming out of a gun or even astrology. The sector will break your heart for its erratic performance but is strangely compelling. 

Imagine the little skip in my heart to find that I have not just one but two managed futures stories on the home page of ETF Express this week. Firstly, an interview with Canada-based Auspice Capital whose Broad Commodity Strategy ETF, COM, is one of the only commodity ETFs to have a five-star Morningstar rating and has outperformed all other broad commodity ETFs – up 30 per cent year to date – with significantly less volatility and drawdown. The fund mirrors Auspice’s CTA/managed futures hedge fund origins, using an active long/flat strategy designed to provide upside exposure with downside protection. Brennan Basniki, director and partner in the firm notes that the GSCI has seen 25 per cent volatility since inception, which is, as he says, tough to invest in, but their version has less volatility than many equity funds.

Our second managed futures ETF story this week comes from hedge fund replication specialist firm Dynamic Beta Investments, whose Andrew Beer believes that managed futures ETFs are better than hedge funds. “Our ETFs are designed to be index-like solutions based on the core positions of hedge funds, and copied using futures contracts,” he explains, and his DBMF fund, iM DBi Managed Futures Strategy ETF, is up 12.5 per cent year to date.

The latest story this week is an interview with airlines’ analyst and ETF manager Frank Holmes whose HANetfs US Global Jets UCITS ETF, JETS provides diversification through exposure to airlines companies around the world listed on well-developed stock exchanges. 

Sunseeking and mean reversion drive this product. “The mean reversion is the important part,” Holmes says, with 40 per cent of the fund focused on that. “The prices can only go up so far before they fall back to earth and then go only so deep until they go back up, so what we did with 8,000 hours of research was find the airlines which dominate the space and have the most liquidity.” 

The In My Opinion this week from Sandeep Rao, a researcher at Leverage Shares, which recently passed USD100 million in terms of assets. Rao notes that the global leveraged ETF/ETP space has continued to grow in 2021, up nearly 20 per cent in assets under management year on year.

Of this, nearly 75 per cent of AUM resides within long leveraged instruments – with the remainder in inverse/inverse leveraged instruments. While the US remains the leader in Short and Leveraged (S&L) products in terms of AUM, Europe comes second in terms of the number of issuances. 

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Beverly Chandler, managing editor, ETF Express

Companies in this issue

Auspice Capital 
Dynamic Beta
Global X ETFs
HANetf
Horizons ETFs
Schwab Asset Management
Simplify Asset Management
SparkChange
Talaria Asset Management
US Global 
 

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