Investment boutique Fortem Capital has launched a daily dealing Ucits strategy offering UK & EU professional and institutional investors lower-cost access to managed futures while reducing the risk of selecting individual managers.
The Fortem Capital Managed Futures Fund will seek to replicate the core return drivers of the commodity trading adviser (CTA) industry through a managed futures replication framework developed by DBi.
Fortem said the structure is intended to provide exposure to the diversification benefits of managed futures in a liquid and more cost-efficient format than many traditional CTA strategies.
Rather than relying on investors to select individual CTA managers, the fund uses a replication approach that seeks to mirror the broad return drivers of the managed futures industry. According to Fortem, the aim is to retain the diversification benefits of the asset class while lowering fees and reducing manager selection risk.
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Managed futures have long been used by institutional investors as a portfolio diversifier because of their historically low correlation with equities and bonds, and have typically performed best during sustained market trends. However, Fortem said investors have often faced high fees and a wide dispersion of returns across managers.
The fund will also include a targeted convex overlay to improve performance during sharp equity-led sell-offs, an environment where trend-following strategies have at times been less reliable, shared the provider.
The overlay will be funded from part of the cost savings generated by the replication approach. Fortem said it is designed to provide targeted protection during severe equity market dislocations, rather than continuous downside protection through every market setback.
