'Dead money’ for a decade: Why this hedge fund approach may deliver an advantage over bonds

Andrew Beer, co-founder and managing member of DBi, told CNBC's "ETF Edge" that investors may want to reconsider their bond allocations in favor of managed futures exposure. Beer said bonds have been "dead money for the entire decade," and argued that the 60/40 portfolio model faces an "existential crisis" in strategic asset allocation. He contended that managed futures, a strategy historically limited to hedge funds, could counterbalance equities better than bonds during periods of volatility, which he linked to recent concerns around debt and the artificial intelligence trade.

Beer's rationale rests on the strategy's ability to take long and short positions across global markets, allowing managers to position early against turbulent events. He stated that investors need an allocation with low correlation to both stocks and bonds that performs during crises, adding that it is "very, very hard to find a better hedge fund strategy than managed futures" for that purpose. Beer helps manage the iMGP DBi Managed Futures Strategy ETF (DBMF), which the firm describes as replicating the performance of leading managed futures hedge funds in a low-cost, liquid ETF. According to FactSet data, the fund was up almost 19% year to date as of Thursday's close.

Nate Geraci, president of NovaDius Wealth Management and ETF Institute co-founder, offered a more measured view. He described fixed income as "the most challenging area in investing right now" but argued that alternatives belong in the sleeve of a well-diversified portfolio that still includes bonds. Geraci cautioned that managed futures ETFs can outperform in volatile markets but may also experience periods of underperformance, requiring investors to understand how such strategies interact with the rest of their portfolio. "To me it's just a balance. It's all about diversification," he said.