NEW YORK — One of Wall Street’s most familiar investment strategies is facing a new challenge as hedge fund veteran Andrew Beer argues that traditional bonds have failed to deliver enough value in recent years, urging investors to consider an alternative approach that has gained nearly 19% in 2026.
Beer, co-founder and managing member of Dynamic Beta investments (DBi), believes managed futures could provide a stronger defense against market turbulence than relying heavily on bonds.
Speaking on CNBC’s “ETF Edge,” the investment executive described bonds as “dead money” over the past decade, questioning whether the traditional 60/40 investment portfolio remains sufficient in an increasingly unpredictable global economy.
The argument comes as financial markets face renewed volatility driven by government debt concerns, changing interest-rate expectations and uncertainty surrounding the artificial intelligence investment boom.
But the proposal is dividing investment professionals.
While Beer sees an opportunity to modernize portfolio diversification, other financial advisers warn that replacing bonds with alternative investment strategies could expose investors to additional risks.
The debate raises a fundamental question: Is Wall Street’s traditional approach to balancing risk becoming outdated, or are hedge-fund-style investments simply another tool that should be used cautiously?
THE 60/40 PORTFOLIO FACES A NEW CHALLENGE
For decades, financial advisers have recommended the 60/40 portfolio as a straightforward way to balance investment growth and stability.
Under this approach, approximately 60% of an investment portfolio is allocated to stocks, while the remaining 40% is invested in bonds.
The idea is that equities provide opportunities for long-term capital appreciation while high-quality bonds can generate income and potentially reduce losses during periods of stock market weakness.
Historically, bonds have often performed relatively well when economic uncertainty pushes investors toward safer assets.
However, that relationship is not guaranteed.
When inflation rises sharply or interest rates climb, both stocks and bonds can decline simultaneously.
This was demonstrated during 2022, when aggressive monetary tightening caused substantial losses across traditional investment portfolios.
Morningstar estimated that a conventional U.S. 60/40 portfolio lost nearly 17% that year.
The episode exposed a weakness in strategies that depend heavily on stocks and bonds responding differently to economic shocks.
For Beer, it provides a reason to reconsider whether investors should rely on bonds for such a large portion of their portfolios.
ANDREW BEER: INVESTORS NEED MORE FLEXIBLE PROTECTION
Beer argues that conventional portfolio construction may be insufficient during periods of rapid changes in inflation, interest rates and geopolitical conditions.
Rather than depending entirely on fixed allocations to traditional asset classes, he favors managed futures.
The strategy uses derivatives contracts to take positions in global financial markets.
Unlike a conventional investment fund that primarily buys and holds stocks or bonds, managed futures can potentially profit from both rising and falling markets.
Managers may take long positions when they expect a market to rise or short positions when they seek to benefit from declining prices.
These investments can involve stock indexes, government bonds, foreign currencies and commodities.
The objective is to identify sustained market trends and adjust exposure as those trends develop.
For example, a managed futures strategy might benefit from rising energy prices, a strengthening currency or falling bond prices, provided its positions correctly capture those movements.
The approach is designed to provide flexibility when market conditions change.
However, its effectiveness depends on how accurately and quickly trading models identify trends.
MANAGED FUTURES ETF GAINS NEARLY 19% IN 2026
The investment product attracting attention is the iMGP DBi Managed Futures Strategy ETF, which trades under the ticker symbol DBMF.
Beer helps manage the fund, which seeks to replicate the aggregate positioning of selected leading managed futures hedge funds using liquid futures markets.
According to FactSet data cited by CNBC, DBMF had gained almost 19% in 2026 through Thursday, October 15.
The performance made the fund an example of how alternative strategies can generate attractive returns during periods of significant market uncertainty.
Unlike traditional hedge funds, which may impose high minimum investments, limited redemption opportunities and complex fee structures, ETFs can provide access through ordinary brokerage accounts.
However, the availability of an investment strategy through an ETF does not eliminate the risks associated with it.
Managed futures funds can experience losses from sudden market reversals, incorrect positioning, leverage and the volatility of derivatives contracts.
Investors also need to consider management fees, trading expenses and differences between individual funds.
Importantly, DBMF’s nearly 19% gain was a year-to-date return as of October 15, not an annualized return or a guarantee of future performance.
WHY MANAGED FUTURES CAN PERFORM WHEN STOCKS AND BONDS FALL
One of the main attractions of managed futures is their potential to behave differently from traditional stocks and bonds.
A well-diversified portfolio does not simply contain numerous investments.
Ideally, it includes assets or strategies that respond differently to changing economic conditions.
Managed futures seek to capture market trends that may develop during inflation shocks, recessions, currency movements or geopolitical crises.
For example, when rising inflation forces central banks to increase interest rates, bond prices may decline.
A managed futures strategy capable of taking short positions in bond futures could potentially profit from such an environment.
Likewise, a sustained rise in commodity prices could benefit a strategy holding long positions in energy or other futures contracts.
This flexibility is one reason the strategy has attracted interest from institutional investors.
However, managed futures should not be confused with guaranteed insurance against market losses.
Their performance depends on the existence and persistence of trends.
Sudden reversals can produce losses when positions established during one market environment become unfavorable.
RESEARCH SHOWS TREND FOLLOWING HAS A LONG HISTORY
The argument for managed futures is supported by research extending beyond the recent market environment.
A study published by researchers associated with AQR Capital Management examined historical evidence for trend-following investment strategies dating back to 1880.
The research, titled “A Century of Evidence on Trend-Following Investing,” found that time-series momentum strategies had delivered positive average returns across a wide range of historical economic environments in the reconstructed data.
It also found that such strategies performed relatively well during several major periods of stress for conventional stock-and-bond portfolios.
The findings suggest that trend-following can offer diversification benefits that extend beyond a single market cycle.
However, historical evidence does not mean every modern managed futures fund will reproduce those results.
The study evaluated systematic investment strategies across long historical periods, not the future performance of any specific ETF.
Investment results can differ because of trading costs, fund structure, position sizing and changes in financial markets.
MORNINGSTAR WARNS THE STRATEGY CAN ALSO DISAPPOINT
Independent investment research provides an important counterbalance to Beer’s optimism.
Morningstar reported in September 2025 that managed futures funds had experienced a challenging stretch despite their diversification potential.
Over the three years through August 31, 2025, the typical fund in Morningstar’s systematic trend category had lost approximately 2.3% annually.
The category also experienced losses during the first half of 2025, as shifting trade policies and rapid market reversals disrupted established trends.
Those results demonstrate that managed futures do not always outperform traditional portfolios.
The strategy can struggle when markets change direction rapidly or fail to develop clear trends.
Morningstar’s analysis nevertheless concluded that managed futures may be useful as a persistent diversifying allocation rather than an investment investors attempt to buy only immediately before market turbulence.
The research reinforces a central point: Diversification strategies should be assessed across different market conditions, not only during periods when they perform exceptionally well.
BONDS STILL HAVE A PLACE, FINANCIAL ADVISER SAYS
Not every market expert agrees that investors should sharply reduce their bond holdings.
Nate Geraci, president of NovaDius Wealth Management and co-founder of the ETF Institute, offered a more cautious perspective during the same CNBC discussion.
Geraci acknowledged that fixed-income investing has become challenging, particularly as investors navigate interest-rate uncertainty.
However, he argued that alternative strategies are better viewed as complements to traditional stocks and bonds rather than complete replacements.
Bonds continue to serve several functions that managed futures cannot necessarily replicate.
High-quality fixed-income securities can provide contractual interest payments, defined maturities and a degree of cash-flow predictability.
U.S. Treasury securities also continue to play an important role in global financial markets.
Managed futures, by contrast, depend on trading performance rather than the contractual repayment characteristics of a conventional bond.
For retirees and investors with near-term financial obligations, these differences can be particularly important.
Geraci’s position emphasizes that portfolio construction should consider investment objectives, time horizons and risk tolerance rather than relying solely on whichever asset class has recently delivered the strongest returns.
FINANCIAL TIMES: AI UNCERTAINTY IS CHANGING PORTFOLIO THINKING
The broader debate comes amid growing concern about the concentration of investment exposure to artificial intelligence.
In October 2026, the Financial Times examined the challenges investors face when attempting to protect portfolios against corrections in AI-related technology stocks.
The report highlighted a variety of potential diversification approaches, including government bonds, gold, value stocks and macro-oriented hedge fund strategies.
Its analysis reflected a growing concern that many conventional equity portfolios have become heavily influenced by a relatively small group of technology companies.
If AI investment expectations weaken, the consequences could extend beyond the technology sector through corporate spending, financing markets and investor confidence.
However, different defensive investments may respond differently depending on the causes of a selloff.
Treasury bonds could benefit from a slowdown that reduces interest rates, while inflationary shocks could hurt bond prices.
Gold, commodities and trend-following strategies may behave differently again.
The challenge is therefore not simply selecting a single replacement for bonds.
It is constructing a portfolio capable of withstanding more than one type of economic shock.
EUROPEAN BOND TURMOIL ADDS TO THE DEBATE
Recent volatility in European government bond markets has intensified concerns about fixed-income investments.
Reuters reported on October 16 that turmoil in European sovereign debt markets had placed hedge funds under greater scrutiny because of their growing influence in bond trading.
Large leveraged positions and the rapid unwinding of trades can amplify market movements when liquidity becomes strained.
Such developments illustrate that bond markets themselves are not immune to significant volatility.
However, they also highlight a potential danger of alternative strategies.
Hedge funds and derivatives-based trading approaches can create risks when leverage, crowded positions and sudden market movements interact.
Not every managed futures ETF uses the same approach as the highly leveraged hedge fund strategies examined in Reuters’ bond-market reporting.
Still, investors should understand the instruments and risks associated with the funds they choose.
WHAT THIS MEANS FOR PHILIPPINE AND ASIAN INVESTORS
The debate over stocks, bonds and managed futures also has implications for investors in the Philippines and across Asia.
Many investors rely on a combination of equities, government securities, corporate bonds, bank deposits and pooled investment funds to manage their savings.
A global shift toward alternative investment strategies could encourage broader discussions about diversification and risk management.
However, U.S.-listed managed futures ETFs are not equivalent to Philippine government bonds or traditional fixed-income products.
Filipino investors considering international ETFs would need to evaluate brokerage access, foreign-exchange movements, fees, tax treatment and regulatory requirements.
Currency changes are especially relevant because an investment denominated in U.S. dollars can produce a different return when measured in Philippine pesos.
Moreover, the suitability of an investment depends on whether its purpose is long-term growth, retirement income, capital preservation or short-term liquidity.
Investors should not interpret a fund’s strong recent performance as sufficient reason to replace stable savings or income-producing assets with derivatives-based investments.
THE BIGGER QUESTION: IS THE 60/40 PORTFOLIO BECOMING OUTDATED?
The traditional 60/40 portfolio has survived multiple economic cycles because it offers a relatively simple way to combine long-term growth opportunities with fixed-income exposure.
But the experience of simultaneous stock and bond losses has prompted investors to question whether traditional diversification is always enough.
Andrew Beer believes managed futures can improve portfolio resilience by providing exposure to strategies that can profit from both rising and falling markets.
The nearly 19% year-to-date gain recorded by DBMF through October 15 has added momentum to his argument.
However, the historical record shows that managed futures can also experience prolonged periods of disappointing performance.
Nate Geraci and independent researchers emphasize that these strategies may be most useful when incorporated thoughtfully into diversified portfolios rather than treated as universal substitutes for bonds.
For investors, the ultimate objective is not necessarily to abandon traditional portfolio construction.
It is to understand the strengths and limitations of each investment approach.
A hedge-fund-style strategy may offer protection when stocks and bonds decline together, but it can also disappoint when financial markets become unpredictable in different ways.
And as investors confront rising debt concerns, uncertain interest rates and the financial risks associated with the artificial intelligence boom, one question is becoming increasingly important:
If the traditional 60/40 portfolio cannot always protect investors during market turbulence, will managed futures become the next essential investment tool — or another strategy whose limitations only become clear when the market changes direction?
