Managed futures ETFs as a bond swap: the retail risks

A fund manager went on CNBC this week to argue that investors should reconsider their bond holdings and look at managed futures instead, a strategy that used to live inside hedge funds and is now sold as an exchange-traded fund. This article looks at how these funds work and what a retail buyer takes on by swapping a bond fund for one.

What happened

Andrew Beer, co-founder and managing member of DBi, told CNBC's ETF Edge that bonds have been dead money for the whole decade. He wants investors to rethink the classic 60/40 mix of stocks and bonds and give part of that space to managed futures.

Beer helps run the iMGP DBi Managed Futures Strategy ETF, ticker DBMF. According to the firm's website, as cited by CNBC, the fund tries to mirror what the biggest hedge funds in this style earn, but packaged as a cheap, easy-to-trade ETF. CNBC reported, using FactSet data, that DBMF was up almost 19% this year as of Thursday's close.

Not everyone on the program agreed. Nate Geraci, president of NovaDius Wealth Management, said bonds still help diversify a portfolio, even if he calls fixed income the hardest area in investing right now.

The mechanics: what a managed futures ETF holds

A futures contract is an agreement to buy or sell something, such as a stock index, a currency, a bond or a commodity, at a set price on a later date. You only post a deposit, called margin, so a small amount of cash controls a much larger position. That is leverage built into the product.

A managed futures fund trades many of these contracts across global markets. It can go long, which gains when a price rises, or short, which gains when a price falls. The usual approach follows trends: add to what is moving one way, cut what has turned. Beer's case is that this lets the fund get positioned early before a turbulent stretch.

The ETF wrapper changes how you hold the strategy, not what the strategy does. You buy a share on an exchange like a stock. Inside, the manager is rolling futures, moving between long and short, and holding cash as collateral. The goal Beer described is low correlation, meaning the fund's returns do not move in step with stocks or bonds.

As Beer put it: "You want something that has low correlation to both stocks and bonds, and something that will do well in crises".

Where the risk is

Low correlation sounds like safety. It is not the same thing. A fund that moves independently of stocks can also fall when stocks rise, or fall at the same time for different reasons. Here is where a retail holder can lose money.

• Trend reversals. A trend-following fund is positioned for the move that was happening. If markets snap the other way quickly, long and short positions can both lose before the fund adjusts.
• Long flat or choppy periods. CNBC noted these funds can outperform in volatile stretches but may also lag for long periods. An investor who sold bonds to buy one may give up steady income and watch the fund drift for years.
• Leverage inside the wrapper. You cannot be margin-called on an ETF share, but the fund itself uses futures that magnify gains and losses. The share price absorbs that swing.
• Buying after a strong year. A return near 19% is a backward-looking number. People often pile in after a good run, which is the classic chasing-performance mistake.

There is also a replication risk. A fund built to track the returns of hedge funds is copying their results from the outside. It may not match them, especially in fast markets.

Bonds vs managed futures: not a straight swap

CNBC itself cautioned that the strategy may not fully stand in for bonds. A high-quality bond fund pays interest and tends to behave in a known way when rates move. A managed futures fund pays no coupon from its strategy and its behavior depends on which trends are running.

Geraci said alternatives belong as one slice of a diversified portfolio holding stocks and bonds, not as a reason to abandon bonds. He also said holders have to give the strategy time over the long term. That matters: a hedge that you sell after one bad year never gets the chance to work.

What to watch

If you are looking at one of these funds, start with how it fits next to what you already own. Geraci's point was exactly that: learn how the fund behaves alongside your other assets before deciding how much space it gets.

Read the fund's documents for what it trades, how much leverage its futures positions carry and how it has done in years when trends were weak, not just in its best year. Check the total cost and the trading spread on the ETF itself. CNBC noted that volatility has been rising on worries about debt and the artificial intelligence trade. Rising volatility is exactly when the risks above matter most.

Sources

• CNBC, 17 Oct 2026

Drafted with an AI model using only the sources listed, and released automatically after software checks on figures and originality. Nobody edited it by hand. For learning only; it does not tell you what to buy or sell.