The WisdomTree Managed Futures Strategy (WTMF) is the premier exchange traded fund offering exposure to managed futures.
It’s also flexible. In June, WisdomTree shook things up for WTMF by adding a tactical equity model to the WTMF portfolio. That’s not that long ago, but it appears that the refresh is already paying off for WTMF investors in terms of performance and volatility reduction.
“Despite a lackluster quarter for the managed futures space, the revamped WTMF has retained and added to the gains from the past year. The Fund also outperformed the benchmark at NAV while experiencing lower volatility,” said WisdomTree analyst Matthew Aydemir in a recent note.
Not only that, but the addition of a tactical equity model to WTMF is helping the new version of the fund outperform the old equivalent. The $148.49 million WTMF turns 11 years old in January, so the new WTMF has some work to do to consistently outpace the older version, but for now, at least, it appears to be off to a solid start.
WTMF’s tactical equity model is deployed via futures contracts on various well-known benchmarks, including the S&P 500 and the small-cap Russell 2000 Index. However, the model isn’t confined to U.S. equity futures as WTMF currently features exposure to Euro Stoxx, Nikkei 225, and S&P/TSX (Canada) futures.
Although the tactical equity model as it’s applied to WTMF sports “only a few months’ worth of history, the strong performance of equities during this time has boosted Fund performance. The tactical equity model has also reduced the volatility of the Fund during periods when commodities have declined,” adds Adyemir.
In addition to equity futures, WTMF also has exposure to Treasury futures, foreign currency contracts, and commodities futures, among others. The fund’s equities exposure was useful in mitigating some of the recent weakness in the commodities complex while long dollar futures are helping investors take advantage of strength in U.S. currency.
“Rates continue to remain low, and that has resulted in a net-long position in our rates contracts. The currency model has been long USD for the past couple of months and remains long this month. After a strong performance in August, the tactical-equity component increased exposure from 32% to the full 40% nominal weight,” according to Adyemir.
Currently, WTMF is bullish on the U.S. dollar, stocks, interest rates, soft commodities, and industrial and precious metals while being bearish on energy and livestock commodities.
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