KMLM ETF

KMLM employs a trend-following, volatility-weighted futures strategy aiming for positive returns in all market conditions, but its performance has varied, notably struggling in 2024. The ETF leverages futures to provide over 100% exposure across commodities, currencies, and fixed income, managed by an algorithm rather than human expertise. Diversifying managed futures strategies across multiple funds, like CTA and DBMF, is crucial to mitigate strategy concentration risk and enhance portfolio performance.

Economic outlooks for 2025 under a second Trump administration generally fall into two distinct camps. While one set of investors position for runaway inflation, the other side looks to invest for a deflationary crisis.

KFA Mount Lucas Index Strategy ETF is an 8.2% yielding ETF that pays out 100% of profits yearly as cash dividends (historical yield since 1988). Diversification with non-correlated assets, like managed futures, can generate "free alpha" and improve portfolio returns while significantly reducing portfolio volatility. KMLM has doubled its industry returns since 1988, thanks to its focus on 100% rules-based trend following, the most effective investing strategy of the last 800 years.

KMLM: A Good Managed Futures Option For Diversification

This year continues to follow in the footsteps of 2023, marked by increased investor optimism but ongoing uncertainty. For now, much remains unknown, and a higher January inflation print only proves the challenges that still lie ahead.

Once again, it's time to take a closer look at an ETF hitting its three-year milestone. Traditionally, that marks the moment when an ETF receives new attention and access to certain brokers.

KMLM is an ETF that follows a systematic trend-following, volatility-weighted futures strategy in commodities, currencies, and fixed income. The ETF has made changes in its exposures and positions this month, including reducing short exposure to currencies by 25% and raising net commodity exposure to 9%. KMLM is still fully short bonds despite the Fed, ECB, and BOE all hinting at or calling out "peak rates."

The KFA Mount Lucas Managed Futures Index Strategy ETF is my preferred low-cost way to access managed futures strategies. Although WTMF has outperformed KMLM in the short run, the drawback is it is positively correlated to markets, which reduces its diversification benefits. Compared to DBMF, KMLM does not suffer from lagged response and over-concentration in a few key instruments.

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