Managed Futures ETFs Gather New Assets as Trade War Looms
- Alternative ETFs haven seen major flow shifts as markets react to tariff news.
- Simplify's CTA and Invesco's IMF have drawn massive inflows despite mixed returns.
- Volatility products experienced heavy outflows despite stellar performance.
Investors poured hundreds of millions into managed futures ETFs in March while simultaneously pulling money from volatility-linked products, according to etf.com fund flows data through early April.
The shift in flows comes as markets process the implications of escalating U.S.-China trade tensions, offering a window into how investors are positioning their portfolios for potential continued volatility. With the Trump administration's recent tariff actions causing market swings, alternative ETFs are drawing renewed attention from those seeking portfolio diversification.
Managed Futures ETFs Grow
The Simplify Managed Futures Strategy ETF (CTA) captured $160.9 million in new assets over the past month, according to etf.com data, despite posting a 3.4% loss during the same period. The actively managed fund, which seeks absolute returns with low correlation to equities through futures contracts in commodity, currency and fixed-income markets, has accumulated $564.6 million in flows year to date.
Invesco's Managed Futures Strategy ETF (IMF), a newer entrant to the space, saw even stronger investor interest with $310.9 million in monthly inflows. The fund, which analyzes approximately 50 different markets globally to determine price trend direction and strength, has raised $310 million since its launch last month.
Where Volatility Meets Opportunity
Meanwhile, volatility-linked products have delivered stellar returns but faced the most redemptions. The ProShares VIX Short-Term Futures ETF (VIXY) gained 43% in the past month, according to etf.com data, while the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) rose 42.4%. Despite these results, investors pulled $84 million and $84.3 million from the funds, respectively.
The First Trust Long/Short Equity ETF (FTLS) attracted $41.7 million in new assets despite a 3.5% monthly decline, etf.com data show. The $1.9 billion fund uses an earnings quality model to rank securities, going long on high-quality stocks and short on low-quality ones while balancing factor exposure and market risk. The fund has seen $259.8 million in inflows year to date.
Interest-rate-sensitive strategies have also drawn investor attention. The Simplify Intermediate Term Treasury Futures Strategy ETF (TYA), which utilizes futures and options on Treasury futures to match or outperform the ICE US Treasury 20+ Year Index, gathered $30.5 million in new assets while delivering a 2.6% monthly return, according to etf.com data.
Smaller alternative funds like the Militia Long/Short Equity ETF (ORR) saw inflows of $23.9 million despite a slight 0.9% monthly decline. The actively managed fund establishes long positions in non-U.S. developed market companies with strong expected future cash flows while shorting U.S. companies with declining cash flow projections.
The KraneShares Mount Lucas Managed Futures Index Strategy ETF (KMLM) faced the largest outflows, at $112.3 million for the month, while declining 3.8%. Similarly, the Convergence Long/Short Equity ETF (CLSE) experienced $8.6 million in outflows alongside a 1.3% monthly decline.
Source: etf.com
