DBEH has crossed the 3-year phase with the upcoming opportunities | Jobs Vox


The ETF industry continues to grow and innovate at an incredible pace. 2022 is on track to be the second-highest year for industry AUMs. One of the biggest trends of the past few years has been the shift in strategies from mutual funds and hedge funds to ETF portfolios, a trend IM Global Partners and Dynamic Beta Investments pioneered in 2019 when they launched two alternative ETFs, DBMF and DBEH.

The most famous iMGP Dbi Managed Futures Strategy ETF (DBMF) It hit its three-year milestone in May this year, and now it’s 2018 iMGP Dbi Hedge Strategy ETF (DBEH) It also crosses the three-year mark today. It’s a big moment for funds employing an equity long-short strategy, with many opportunities still on the horizon.

“In the year In 2019, iMGP and DBi partnered to launch two new alternative ETFs in an easily accessible, affordable and efficient framework that leverages DB’s long-standing investment research portfolio. We are delighted to see the iMGP DBi Managed Futures Strategy ETF (ticker symbol DBMF) ​​and the iMGP DBi Hedge Strategy ETF (ticker symbol DBEH) achieve such successful three-year track records and industry recognition,” said Jeff, CEO of iM Global Partner US. Seeley. Consultants, VettaFi told him.

DBEH is actively managed and seeks long-term capital appreciation through the use of long and short positions and forward contracts in equities, currencies and fixed income. Hedge funds employ a dynamic beta engine, a proprietary, quantitative model, to determine the best long-short equity hedge fund positions following a long-short equity strategy.

By looking at various equity hedge funds, the dynamic beta engine can detect changing trends in how hedge funds are allocated, adjust the models accordingly, and create an optimized portfolio of long and short positions that resets each month. It holds investment-grade debt securities, such as bonds and treasuries, for future investments, for liquidity or to increase yield.

The proof is in the performance.

“Since inception, DBEH has materially reduced developed market stocks by less than half and 300 bps per year in alpha – for traditional portfolios, this is a great way to maximize the efficient frontier,” said Matthias Mamu-Mani, Co-Portfolio Manager. Board member of DBEH and DBMF and Dynamic Beta Investments.

Dynamic Beta Investments and IM Global Partners leveraged more than $1 billion in hedge fund strategy ETF products in 2018. They confirmed the price with DBMF in 2022. Generally locked in by all but institutional investors, these types of strategies can provide significant diversification benefits to portfolios, and the potential for untapped DBEH market share is enormous.

As of the end of the third quarter, the hedge fund industry had $2.2 trillion in AUM, according to data from EurekaHedge; By comparison, the ETF industry had more than $5.9 trillion in AUM. ETFs continue to gain market share, but that growth has so far been much smaller than in alternatives, particularly equity long-short strategies. AUM for equity long-short hedge funds was $647 billion in the third quarter, compared to just $1.4 billion in AUM for long-short equity ETFs.

“Hedge fund ETFs – well done – are a greenfield environment. There are now $7 trillion in ETF assets and only a handful of basis points allocated to true hedge fund strategies,” said Andrew Brewer, associate portfolio manager at DBEH and DBMF and managing member of Dynamic Beta Investments. He said.

Hedge fund strategies held in ETFs offer several unique advantages that appeal to advisors. Diversification strategies incorporate multiple hedge funds into their models and calculations, providing diversification potential and eliminating the risk of a single manager.

“No model distributor should fill the ‘equity long/short bucket’ with a single fund. The idiosyncratic risk of individual funds — manager, sub-strategy, etc. — simply outweighs the long-term benefits of equity,” says Mamu-Mani.

Transparency and low fees keep hedge fund ETFs ahead.

With transparent EFs, the ease of seeing how a complex strategy is positioned at any given time is great for advisors and investors alike. “It’s true that most hedge fund strategies never work in ETFs: transparency alone is a deal killer. By investing in deep and liquid futures markets, we are very happy that dealers see our position every day,” explained Beer.

One of the biggest advantages to country fund ETFs, however, is the savings from management fees. DBEH has a management fee of 0.85%, while most hedge funds charge a management fee of 2% with an additional 20% performance fee that puts the hedge fund above the threshold. Advisers and investors can capture much of the alpha generated through ETF wraps.

“Considering investing in a forty-leader equity long/short hedge fund with no minimum fees, intraday liquidity and daily risk reporting? That’s what we’re trying to simulate with DBEH,” Beer said.

For more news, information and analysis, visit Managed Futures Channel.


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