CTA - CTA: I'm Upping My Exposure To Managed Futures (Rating Upgrade)

2025-02-21 03:26:03 ET

Summary

• I recommend the Simplify Managed Futures Strategy ETF as a hedge due to its positive returns in various market conditions and strong performance since inception.
• CTA's active management by Altis Partners has proven effective, with strategic long/short positions in commodities and treasuries, demonstrating keen trend-spotting abilities.
• Despite its high turnover and opaque strategy, CTA's 10.62% yield and diversification benefits make it suitable for aggressive and moderate investors with varying allocations.
• I remain bullish on CTA and suggest pairing it with other managed futures ETFs like DBMF to mitigate key-person risk and enhance portfolio diversification.

Introduction

I first started covering the Simplify Managed Futures Strategy ETF ( CTA ) back in December , when I recommended it as a hedge against an uncertain S&P 500. CTA is a managed futures fund, meaning that it trades derivatives contracts across a variety of assets, including equities, bonds, currencies, and commodities with the goal of producing positive absolute returns in all market conditions. The reason one may include it as a hedge to an equities or bond portfolio is because it can provide positive returns in years that are bad for equities or bonds in particular, and provide an expectation of consistent positive returns. This doesn't always play out, but that's the theory behind it.

Managed futures funds have become very popular in the past few years, as savvy ETF managers have become eager to bring these kinds of "hedge fund like" tools to retail traders. What the fund is doing is actually run by a different kind of investment company than a hedge fund, called "commodities trading advisers," which is where we get the ticker CTA for Simplify's fund....

For further details see: