As stocks, bonds fall, a trade that boomed in 2022 may be winner again

Managed future strategies are gaining renewed attention as investors look for new sources of returns from the market at a time when both stocks and bonds are under pressure as a result of the U.S.-Iran war and the risk of 1970s-style stagflation.

These strategies, which are typically run by commodity trading advisors, use systematic models to trade future contracts across different asset classes. Rather than focus on short-term market moves in traditional asset classes, they aim to capture broader trends that unfold over months. The ability to adapt to changing market conditions, and their performance back in 2022, has made managed futures funds increasingly relevant in 2026.

In 2022, when the S&P 500 Index fell around 18% and the Bloomberg U.S. Aggregate Bond Index was down about 13%, managed future strategies were up 20%.

“That’s meaningful outperformance in an environment when stocks and bonds are under pressure,” Nate Geraci, NovaDius president, said on CNBC’s “ETF Edge” earlier this week.

Andrew Beer, managing member at DBi, which manages the largest managed futures ETF, the iMGP DBi Managed Futures Strategy ETF (DBMF), said on “ETF Edge” that the uncertainty around inflation and interest rates, and the volatile geopolitical backdrop, are a good match for the managed futures approach, which can take long or short positions and have the flexibility to respond to different trends across the markets.

Managed futures ETFs remain a relatively small category, collectively holding around $6.5 billion in assets, according to ETFAction.com. Within that space, the iMGP DBi Managed Futures Strategy ETF has attracted about $1 billion in flows this year.

The use of the managed futures approach with ETFs allows more investors to access a strategy that been associated with the world of hedge funds historically, but in a more liquid and transparent structure.

“We’re leveraging the work of largest hedge funds, and trying to be more efficient, pick up what they are doing,” Beer said. “We thrive with changes over 3, 6, 9, 12 months, not Monday to Thursday,” he said.

“Certainly, the [ETF] industry is going to be launching additional managed futures products along with other hedge funds strategies,” Geraci said during the podcast portion of “ETF Edge.”

Geraci said one clear signal that this approach is likely to see more interest from retail investors is three of the biggest asset managers getting into the space with their own branded managed futures ETFs: BlackRock, Invesco and Fidelity Investments.

“They all entered the market in the past year and that is a sign of real investor demand going forward,” Geraci said. “The interest is there, especially given the backdrop of this market environment,” he added.

Still, managed future ETFs remain more complex than regular stock and bond investments, and investors need to understand that while their performance can beat stocks and bonds during periods of market stress and volatility, they can also lag.

“I do think these are clearly more complex than other types of ETFs on the market,” Geraci said. “Investors and advisors need to have a firm understanding of how these work,” he said. Maybe most important, he added, “Investors have to be able to stick with managed futures through inevitable periods of underperformance.”

“They can work really well when you need them, but you have to be able to let them work over full market cycles,” Geraci said.

Beer said investors can think of an allocation to this type of strategy being in the range of 3% to 5% of an overall market portfolio diversification approach, “just sitting there alongside hard assets or infrastructure.”

“I think we all have the same goal: we want our investors to be able to grow their assets, but sleep at night,” he said.