2 Strategies to Capitalize on Increased Market Dispersion

After the underperformance of stocks and bonds last year, it’s no surprise that diversification strategies are a significant focus this year. Alternatives continue to garner advisor and investor interest as market dispersion grows, including managed futures and long/short strategies.

Andrew Beer of DBi and Marc Regenbaum of Neuberger Berman discussed the benefits of these strategies in a recent Alternatives Symposium session hosted by Tom Lydon, vice chairman of VettaFi.

When polled, 39% of responding advisors reported the use of managed futures or long/short strategies in their portfolios previously. However, those advisors carried no current allocations. 10% reported a current investment in both strategies, while 33% relayed they were learning about one or both.

Managed Futures a “Beacon of Green in a Sea of Red”

Andrew Beer, co-founder of DBi and co-PM of the iMGP DBi Managed Futures Strategy ETF (DBMF), chalks up the slow broad-based adoption of managed futures to the difficulty historically of implementing the strategy.

“Managed futures is a tactical investment strategy that tends to perform the best during the worst market conditions,” explained Beer. In the decade-long run-up of equity outperformance and suppressed market volatility, it’s a strategy that yielded muted returns.