DBi, a specialist in alternative investments, has introduced a managed futures exchange-traded fund (ETF) in Europe. This ETF is an extension of its existing Luxembourg-based mutual fund, providing a new way for investors in Europe to access the strategy.
Key Details of the iMGP DBi Managed Futures Fund R USD ETF
The new ETF, called the iMGP DBi Managed Futures Fund R USD ETF (DBMF), has a total expense ratio (TER) of 0.75%. It is listed on Euronext Paris, with plans for a listing on the London Stock Exchange in the near future.
Although DBi manages the investment strategy of DBMF, the ETF is part of the iM Global Partner (iMGP) platform, which will oversee its distribution. This marks iMGP’s first ETF launch in Europe.
Success of the US-Version of the Strategy
The US version of DBi’s managed futures strategy, also named DBMF, has experienced significant success. Launched in 2019, it has grown to $1.1 billion in assets under management (AUM), making it the largest managed futures ETF globally.
Additionally, DBi has received approval from the Luxembourg regulator for a new managed futures strategy that excludes commodities. This strategy will first be available as an ETF share class, designed to meet specific client demand, but will be marketed more broadly once listed.
Return of Managed Futures ETFs in Europe
Managed futures ETFs have not been available in Europe since JP Morgan Asset Management closed its strategy in 2020. However, there are currently seven managed futures ETFs in the US, with combined assets of approximately $2.6 billion. Given the growing demand for diversification strategies, especially amid market volatility, the launch of DBi’s ETF could prove to be well-timed.
What Are Managed Futures?
Managed futures are a type of hedge fund strategy, often trend-following in nature. The strategy involves taking long or short positions across various asset classes through futures contracts. The goal is to capitalize on price trends, which tend to persist for a period, by entering early in their development.
This strategy works best during periods when markets experience strong trends in either direction that last from months to years. It also provides diversification by delivering returns uncorrelated with both bonds and equities, particularly during market downturns.
Andrew Beer, co-founder of DBi, described managed futures as one of the few alternative strategies with “indisputable diversification benefits.”
DBi’s Strategy and the ETF’s Objectives
DBi’s trend-following strategy is focused on the “beta” style. The ETF seeks to replicate the pre-fee performance of a basket of leading managed futures hedge funds, offering investors a way to benefit from this strategy.
Philippe Couvrecelle, founder and CEO of iMGP, expressed excitement about bringing the managed futures strategy to European investors, calling it a valuable addition to their offerings. Julien Froger, head of Europe at iMGP, emphasized that the new ETF share class offers a more “accessible, cost-efficient, and transparent” means of accessing the diversification benefits of managed futures.
Future Competition in the Managed Futures ETF Space
The competition in the managed futures ETF space is heating up, especially in the US. BlackRock has received approval for its own managed futures strategy, and both Fidelity and Invesco have pending filings with regulators. While BlackRock and Fidelity have not commented on plans for Europe, Invesco stated that it has no current plans for expansion in this region.
Simplify Asset Management, with an $800 million managed futures ETF, is considering launching its strategies in Europe. First Trust, with a $154 million managed futures ETF, has already begun distributing its product in Europe.
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