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As stocks, bonds fall, a trade that boomed in 2022 may be winner again

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4 months ago

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ETF Edge on the mechanics of managed futures

Managed future strategies are gaining renewed attention as investors look for new sources of returns from the market at a time when both stocks and bonds are under pressure as a result of the U.S.-Iran war and the risk of 1970s-style stagflation.

These strategies, which are typically run by commodity trading advisors, use systematic models to trade future contracts across different asset classes. Rather than focus on short-term market moves in traditional asset classes, they aim to capture broader trends that unfold over months. The ability to adapt to changing market conditions, and their performance back in 2022, has made managed futures funds increasingly relevant in 2026.

In 2022, when the S&P 500 Index fell around 18% and the Bloomberg U.S. Aggregate Bond Index was down about 13%, managed future strategies were up 20%.

“That’s meaningful outperformance in an environment when stocks and bonds are under pressure,” Nate Geraci, NovaDius president, said on CNBC’s “ETF Edge” earlier this week.

Andrew Beer, managing member at DBi, which manages the largest managed futures ETF, the iMGP DBi Managed Futures Strategy ETF (DBMF), said on “ETF Edge” that the uncertainty around inflation and interest rates, and the volatile geopolitical backdrop, are a good match for the managed futures approach, which can take long or short positions and have the flexibility to respond to different trends across the markets.

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Performance of the iMGP DBi Managed Futures Strategy ETF over the past five years.

Managed futures ETFs remain a relatively small category, collectively holding around $6.5 billion in assets, according to ETFAction.com. Within that space, the iMGP DBi Managed Futures Strategy ETF has attracted about $1 billion in flows this year.

The use of the managed futures approach with ETFs allows more investors to access a strategy that been associated with the world of hedge funds historically, but in a more liquid and transparent structure.

“We’re leveraging the work of largest hedge funds, and trying to be more efficient, pick up what they are doing,” Beer said. “We thrive with changes over 3, 6, 9, 12 months, not Monday to Thursday,” he said.

“Certainly, the [ETF] industry is going to be launching additional managed futures products along with other hedge funds strategies,” Geraci said during the podcast portion of “ETF Edge.”

Geraci said one clear signal that this approach is likely to see more interest from retail investors is three of the biggest asset managers getting into the space with their own branded managed futures ETFs: BlackRock, Invesco and Fidelity Investments.

“They all entered the market in the past year and that is a sign of real investor demand going forward,” Geraci said. “The interest is there, especially given the backdrop of this market environment,” he added.

Still, managed future ETFs remain more complex than regular stock and bond investments, and investors need to understand that while their performance can beat stocks and bonds during periods of market stress and volatility, they can also lag.

“I do think these are clearly more complex than other types of ETFs on the market,” Geraci said. “Investors and advisors need to have a firm understanding of how these work,” he said. Maybe most important, he added, “Investors have to be able to stick with managed futures through inevitable periods of underperformance.”

“They can work really well when you need them, but you have to be able to let them work over full market cycles,” Geraci said.

Beer said investors can think of an allocation to this type of strategy being in the range of 3% to 5% of an overall market portfolio diversification approach, “just sitting there alongside hard assets or infrastructure.”

“I think we all have the same goal: we want our investors to be able to grow their assets, but sleep at night,” he said.

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Private Credit Expansion and Regulatory Oversight in 2026 Capital Markets

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5 days ago

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August 9, 2026

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The global private credit market has solidified its role as a fundamental pillar of enterprise finance, expanding rapidly across middle-market lending, asset-backed finance, and infrastructure financing. As non-bank financial institutions capture a larger share of corporate debt origination, global regulatory bodies are increasing oversight to evaluate market transparency and systemic risk interconnections.

Growth Drivers in Direct Lending
Direct lending platforms have continued to attract substantial institutional allocations from pension funds, sovereign wealth entities, and insurance companies seeking attractive risk-adjusted yields. Private debt funds offer corporate borrowers customized financing structures, faster execution timelines, and confidentiality compared to syndicated loan markets.

In 2026, private credit managers are increasingly financing larger corporate transactions, providing multi-billion-dollar credit facilities for buyout deals and corporate restructurings. The flexibility of private debt contracts—featuring unitranche pricing and tailored covenant packages—has made direct lending the preferred capital source for middle-market enterprise sponsors.

Regulatory Scrutiny and Systemic Risk Assessment
The rapid growth of non-bank intermediation has drawn heightened scrutiny from financial regulators in North America and Europe. Because private debt agreements are negotiated privately without public exchange disclosures, central banks are evaluating potential vulnerabilities related to asset valuation consistency and fund liquidity profiles.

Regulatory agencies are introducing guidelines aimed at improving reporting standards for private investment vehicles managing institutional assets. Key focus areas include monitoring leverage ratios within private credit funds and evaluating indirect credit exposures between commercial banking institutions and private debt funds.

Navigating Elevated Refinancing Costs
With benchmark interest rates remaining elevated, private debt borrowers face higher debt service obligations on floating-rate credit facilities. Financial advisory firms report an increase in proactive liability management strategies, including payment-in-kind (PIK) interest options, equity infusions from sponsors, and covenant modifications.

Private credit managers with deep operational capabilities are actively working alongside portfolio companies to optimize working capital and maintain cash flow coverage ratios during periods of higher borrowing costs.

Key Financial Takeaways
1. Mainstream Asset Class: Private credit has expanded beyond niche alternative asset status into a core corporate finance solution.
2. Enhanced Transparency Standards: Regulatory frameworks are evolving toward greater disclosure requirements for private debt managers.
3. Proactive Risk Management: Lenders and sponsors must prioritize debt sustainability and active portfolio monitoring amid high benchmark rates.

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Venture Capital and Startup Valuations in 2026: Focus on Unit Economics and Sustainable Growth

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1 week ago

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August 5, 2026

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The global venture capital (VC) ecosystem is operating under a disciplined investment framework in 2026. Following years of valuation adjustments and shifting liquidity environments, venture capital firms and private equity investors are prioritizing proven unit economics, positive cash flow pathways, and capital efficiency over rapid, unconstrained user acquisition.

The Shift Toward Disciplined Startup Valuations
Early-stage and growth-stage startup valuations have stabilized at sustainable historical averages. Venture capital partners are conducting rigorous due diligence processes before deploying capital, scrutinizing gross margins, customer acquisition costs (CAC), net revenue retention (NRR), and lifetime value (LTV) metrics.

While total capital deployed remains robust, seed and Series A funding rounds are taking longer to finalize. Founders are expected to demonstrate clear product-market fit and defensible intellectual property rather than relying on top-line revenue projections unsupported by strong underlying economics.

M&A Activity and Liquidity Solutions
The market for venture-backed exits is seeing renewed momentum through strategic mergers and acquisitions (M&A) and secondary market liquidity facilities. Established corporate enterprises are acquiring high-performing technology startups to integrate proprietary artificial intelligence models and specialized software solutions into their product ecosystems.

Simultaneously, secondary market transactions have become an essential liquidity mechanism for early employees and institutional investors. Specialized secondary funds are purchasing pre-IPO shares at discounted valuations, providing liquidity opportunities while companies remain private for longer durations.

Sector Allocation: Deep Tech, Clean Energy, and Enterprise Automation
Venture capital investment is heavily concentrated in deep technology and capital-intensive engineering sectors. High-growth investment themes include:
– Next-Generation Semiconductors: Hardware startups designing specialized AI processors and energy-efficient microchip architectures.
– Clean Technology: Battery chemistry innovations, carbon capture solutions, and grid-scale energy storage startups.
– Enterprise Process Automation: Software platforms that automate complex workflows in healthcare, financial services, and industrial logistics.

Key Insights for Entrepreneurs and Investors
1. Prioritize Capital Efficiency: Startups focused on achieving operational profitability receive higher valuation premiums from institutional investors.
2. Strategic Exit Planning: Corporate M&A is serving as a primary exit route for venture-backed startups navigating prolonged IPO windows.
3. Focus on High-Moat Technologies: Deep tech and proprietary software architectures are securing the majority of growth-stage capital allocations.

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The Evolution of Digital Payments: Cross-Border Settlement and Central Bank Digital Currencies in 2026

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1 week ago

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August 5, 2026

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The infrastructure supporting global commerce is undergoing a major technological upgrade as real-time digital payment rails, cross-border settlement solutions, and Central Bank Digital Currency (CBDC) pilot programs achieve widespread commercial adoption. Financial institutions and fintech developers are reimagining payment processing to eliminate friction, lower transaction fees, and accelerate settlement speed.

Transforming Cross-Border Settlement Infrastructure
For decades, international corporate payments relied on legacy correspondent banking networks characterized by multi-day settlement delays, opaque fee structures, and high foreign exchange markups. In 2026, modern cross-border payment networks are enabling near-instantaneous settlement for international trade transactions.

Financial technology platforms are leveraging distributed ledger technology and real-time gross settlement (RTGS) interconnections to settle transactions in seconds. International trade participants benefit from reduced working capital requirements and minimized foreign exchange volatility risks during cross-border transfers.

Commercial Expansion of Central Bank Digital Currencies
Central banks representing major global economies are advancing CBDC initiatives from research phases into active commercial deployment. Wholesale CBDCs—designed specifically for interbank settlement and financial institution clearing—are demonstrating substantial efficiency gains in domestic and international transactions.

At the retail level, several nations have introduced public digital currency options alongside existing commercial banking networks. These sovereign digital payment channels aim to expand financial inclusion, lower consumer transaction fees, and improve the efficiency of government-to-citizen financial disbursements.

Open Banking and Embedded Finance Ecosystems
Alongside settlement infrastructure upgrades, open banking regulations and embedded finance frameworks are transforming merchant-consumer interactions. Commercial businesses across retail, travel, and business-to-business (B2B) services are integrating seamless payment APIs directly into their customer software interfaces.

Through open banking frameworks, consumers can initiate secure bank-to-bank payments without relying on traditional credit card networks, significantly reducing merchant processing fees. Integrated Buy-Now-Pay-Later (BNPL) options and point-of-sale credit facilities continue to expand, driving higher conversion rates for digital commerce platforms.

Strategic Financial Takeaways
1. Treasury Optimization: Corporate treasurers should leverage instant cross-border payment platforms to minimize liquidity buffers and foreign exchange exposure.
2. CBDC Integration: Financial institutions must prepare internal core banking systems to interface with emerging wholesale CBDC payment rails.
3. Merchant Fee Reduction: Enterprise merchants can lower payment processing overhead by adopting account-to-account (A2A) open banking checkout solutions.

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