Managed futures ETFs are better than hedge funds says Dynamic Beta’s Beer

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Andrew Beer, Dynamic Beta

Hedge fund replication specialist firm Dynamic Beta Investments’ Andrew Beer believes that managed futures ETFs are better than hedge funds, and his DBMF fund, iM DBi Managed Futures Strategy ETF, is up 12.5 per cent year to date to prove it.

“We believe that product development in the entire liquid alts world is entirely misguided,” Beer says. “If you build and run a model portfolio the whole ethos is that you want to invest in an ETF that gives you benchmark or like exposure so that you are never wrong.”

Dynamic Beta’s products are based on this approach. “Our ETFs are designed to be index-like solutions based on the core positions of hedge funds, and copied using futures contracts,” he explains.
Beer believes that there has been very little good product development in the entire ETF space around alternative products, commenting that it’s been all about bitcoin or funds like ARK and other long only products that have a thematic twist.

He believes that wealth managers want hedge funds and sees them moving money out of fixed income into hedge funds. “The ETF space is at risk of being left behind from a product perspective,” he says. “DBMF should be a default allocation.”

Dynamic Beta’s assets are close to USD700 million and the DBMF offering is hovering around USD63 million with new money expected to take it to over the critical USD100 million point over the next few months.

While managed futures have had a somewhat mixed performance experience over recent years, Beer’s fund has that 12.5 per cent performance, out-performing the Société Générale CTA index, and offers, he believes, a hedge against the risk of inflation and the impact that might have on fixed income.

“We all thought active ETFs would take over the world and they didn’t,” Beer says. “There are two types of ETF investors: the gun-slinger, cannabis, bitcoin, ARK ETF guys who are effectively day traders, and then the long-term asset allocation robo-adviser guys.”

Beer believes that his DBMF offering removes the idiosyncratic risk of the single manager. “We are the only people who have been thinking about this issue and built something that reduces the risk of a single manager.”

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