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Fund Spy: Morningstar Medalist Edition

Managing the Future With These Alternative Funds

A new managed-futures Morningstar Medalist joins the trend.

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After a strong 2014 run, managed futures are roaring back on the liquid alternatives stage, as investors poured $1.6 billion into these trend-following mutual funds. There is certainly a degree of performance-chasing here, considering that investors had nearly given up on the strategy. Since the group's meteoric 2008 rise--that year managed-futures funds were one of the few Morningstar Categories to gain in value--the group has largely floundered in terms of performance and flows. (A word of caution: There were only a few managed-futures mutual funds at that time, but their hedge fund counterparts, called systematic futures in Morningstar's database, increased 18.1% in 2008). Finally, for a more detailed discussion on the efficacy of managed futures and other issues plaguing the space, please see my colleague Jason Kephart's article, Buyer Beware With Managed-Futures Funds.

The trouble for mutual fund investors looking for managed-futures exposure is that there haven't been many good options.  AQR Managed Futures Strategy (AQMIX) and its higher-volatility sibling  AQR Managed Futures Strategy High Volatility (QMHIX) were the only Morningstar Medalists in the category until recently, carrying Morningstar Analyst Ratings of Silver because of their broadly diversified exposure, transparent processes, and relatively low fees. Some funds in the category are too expensive (there are nontransparent performance fees in some), others exhibit uneven returns, and too many are poorly designed. Recently, however, we added a new medalist for the category-- Natixis ASG Managed Futures Strategy (AMFAX), which is rated Bronze. While investors should be mindful of this fund's relatively higher volatility, it still represents a good option in this niche space.

Josh Charney, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.