As interest rates, inflation, geopolitical tensions and equity market volatility continue to escalate, investors are increasingly turning to alternatives to mitigate risk in their portfolios. Among the types of liquid alts strategies attracting investors is managed futures. Investment managers specifically handling managed future liquid alts strategies are ranking high among asset gainers amid the volatility. To learn more about the increasing inflows of managed futures and if it is sustainable, FundFire spoke with AlphaCore Director of Research Johann Lee, CFA, for insight.
According to Lee, managed futures can continue to perform well in the medium- and long-term future “as long as macro uncertainty really anchors and drives the market narrative.” Pointing to our environment’s current uncertainties, “You really have multiple risk factors that are macro-related, and that can drive market pricing in a variety of directions,” he adds.
Lee believes the short-term outlook for liquid alts seems promising too and may even prompt some new advisors to enter the space. However, he cautions that it is important to seek liquid alt managers with proven track records before diving in headfirst.
“Some managers might give longer-term trend models a heavier weighting in their strategy and others may take a more balanced approach across various time-horizon models,” Lee explains. “This year, if you start digging into which models across trends have done the best, the longer-term horizon models have done better.”