Advisors Shift to Managed Futures and Options-Income ETFs

Financial advisers are increasingly allocating to managed futures and options-income ETFs as the traditional 60/40 stock-and-bond portfolio faces pressure from persistent inflation and periods when stocks and bonds decline together. The change reflects concern that the historical negative correlation between equities and fixed income has weakened.

Mount Lucas Management executives say some planners are substituting illiquid private alternatives that do not provide reliable diversification. David Aspell, the firm’s chief investment officer of global macro, warned that private equity and private credit update valuations infrequently, which can allow losses to accumulate unnoticed. He noted that a portfolio split into 60% public stocks, 20% private equity and 20% bonds can function like an 80/20 public-equity-heavy allocation. Aspell added that the traditional 60/40 approach “relies on that negative correlation of stocks and bonds and it relies on a low inflation world to work.”

Gerald Prior, Mount Lucas’s head of managed futures, described managed futures as a separate source of return that can perform when stocks and bonds move together. Managed futures managers trade futures across commodities, currencies and interest rates and can take long or short positions to capture trends across markets. Prior cited the strategy’s performance in 2008, when it went short commodities and long bonds, and again in 2022, when rising inflation lifted commodity prices while bond prices fell. He summarized the approach by saying, “Equity markets hate when correlations go to one. That’s their weakness and that’s our strength.”

Mount Lucas offers that exposure through the KFA Mount Lucas Managed Futures Index Strategy ETF (KMLM). Fund data show the ETF carries a 0.90% expense ratio, holds about $330 million in assets, and has posted year-to-date returns above 15% with roughly $128 million in net inflows. The fund traces its underlying benchmark back to 1988 and is presented as an ETF wrapper of an institutional managed-futures strategy.

On the income side, YieldMax’s chief strategist Mike Khouw argued that a typical 3% dividend yield is insufficient for many clients. He described options-income ETFs that sell call spreads against a basket of dividend-paying stocks to generate supplemental cash flow. The YieldMax U.S. Stocks Target Double Distribution ETF (DDDD), launched in March 2026, seeks approximately twice the annualized distribution yield of a large dividend ETF and aims for about 75 basis points per quarter in net options income in addition to underlying dividends, targeting a total yield near 6% to 7%.

Khouw pointed to the Dow Jones U.S. Dividend 100 Index as the DDDD selection source, noting it is concentrated in energy, consumer staples and older industrial companies that trade at lower forward price-to-earnings ratios. Index data show a near-16% year-to-date return through early May versus roughly 7.5% for the S&P 500 and a forward P/E around 14.6 compared with about 22 for the S&P 500.

Advisers considering these ETFs emphasize two practical differences: daily liquidity in the ETF structure versus limited redemptions and infrequent valuations in many private funds, and distinct return drivers-managed futures capture cross-market trends while options-income strategies increase cash flow from equity holdings. The recent market environment, including the 2022 period when stocks and bonds fell together, has prompted advisers to reexamine diversification and income options and to add liquid, strategy-driven ETFs to client portfolios.