Key Takeaways
- • BlackRock, Fidelity, and Invesco are entering the managed futures space with new ETFs designed to replicate commodity trading advisor (CTA) trend-following strategies, according to Bloomberg.
- • Hedge fund CTAs manage approximately $340bn but have seen stagnant growth over the past decade, with assets declining since 2022, per BarclayHedge data.
- • Managed futures ETFs nearly doubled assets in the past year to $3.3bn and delivered an average 7.3% return in 2024, versus 2.4% for the SG CTA Index.
- • The three largest managed futures ETFs carry an average expense ratio of 0.84%, compared with the 1.3% management fee plus 13.9% performance fee typical of hedge fund CTAs, according to Societe Generale.
- • ETFs trade fewer markets than hedge funds; a Man AHL-sub-advised ETF trades 26 markets, versus far more for its hedge fund counterpart.
Summary
Hedge fund CTAs control approximately $340bn, according to BarclayHedge data, but their growth has been stagnant over the past decade, and assets have declined since 2022. Managed futures ETFs remain small by comparison, yet their assets nearly doubled over the past year to $3.3bn, supported by lower fees and stronger recent performance.
Performance diverged in 2024. The SG CTA Index, which tracks 20 hedge funds with similar strategies, returned 2.4%, while managed futures ETFs delivered an average return of 7.3%. Some of the largest hedge fund CTAs focused on exotic markets posted significant losses: Man AHL Evolution and Systematica Alternative Markets Fund each declined about 6%, and Florin Court Capital fell 11%.
Fee structures also favor the ETFs. Societe Generale data show the three largest managed futures ETFs carry an average expense ratio of 0.84%, while hedge fund CTAs charge an average 1.3% management fee and 13.9% on performance. The ETFs remain more expensive than passive stock index funds, but are significantly cheaper than hedge funds.
The products carry trade-offs. Hedge funds can trade hundreds of markets and adjust strategies dynamically, whereas ETFs must remain highly liquid and transparent and therefore often trade a narrower set of assets. A managed futures ETF sub-advised by Man AHL, for example, trades just 26 markets. The launches are part of a broader trend of bringing institutional strategies to a wider investor base, following ETFs that replicate private equity and private credit exposures.
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