(Bloomberg) -- A hedge-fund mimicking ETF that has trounced the S&P 500 this year and lured $1 billion of inflows along the way is taking the trade across the Atlantic -- just as the trend-following strategy starts to cool.
Dynamic Beta investments and iM Global Partner is launching the iMGP DBi Managed Futures Fund, a European take on the US-listed DBi Managed Futures Strategy ETF (ticker DBMF), according to a Tuesday press release.
The investing style takes long and short positions in the derivatives market in order to ride the momentum of asset prices -- a big winner this year as the one-way inflation trade sparked consistent moves across currencies, stocks and bonds.
The original US strategy has returned a whopping 22% in 2022, boasting $1.05 billion in assets versus just $63 million a year ago, while the US equity benchmark has shed 14%.
The outlook for the trade is darkening, however, with markets facing a potential regime shift from a brewing economic downturn that undercuts inflation. The price of DBMF has already dropped about 9% from its year-to-date highs notched last month, as investors bet that rampant consumer price growth may have peaked.
Read more: Hedge Fund ETF Up 33% This Year Jumps Past $1 Billion in Assets
While the new version isn’t an ETF, it will follow the same strategy of seeking to replicate the pre-fee performance of a pool of hedge funds using a portfolio of futures contracts across assets.
“The success of our US domiciled ETF strategy (DBMF) has led to European clients asking if we are planning to launch a UCITS version and this is it,” said Jamie Hammond, deputy CEO of iM Global Partner.
The Undertakings for Collective Investment in Transferable Securities, or UCITS, is a regulatory framework in Europe for pooled investment vehicles that provide enhanced investor protections.
A formal launch for the fund is targeted for January, Hammond said.
©2022 Bloomberg L.P.
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