Are Managed Futures Strategies Paying Off in 2025?

Jina Yoon | Chief Alternative Investment Strategist

Last Updated: May 28, 2025

Additional content provided by Michael McClain, AVP, Research.

Managed futures funds have faced a difficult 2025, with the HFRX Macro: Systematic Diversified CTA Index down 8.0% through May 23. As one of our preferred liquid alternative implementation choices, a dive into what has been driving this year’s performance is warranted.

Performance Drivers

For background, managed futures strategies, also known as trend-followers or Commodity Trading Advisors (CTAs), can be notoriously difficult to parse (and not to mention agree on a category name). But these strategies use price-based signals over the past several weeks/months to take long and short positions across equity, bond, commodity, and currency markets. Over the past 10 years, the HFRX Macro Systematic Diversified CTA Index has only annualized at 1.9%. However, as expected it has performed very well in market sell-offs such as 2022, when managers take large short positions in equity markets.

Consistent Returns with Strong Performance in Market Sell-Offs

Source: LPL Research, FactSet 05/23/25

Unfortunately, in 2025, the ability for managers to benefit from their diversified trading approach across the four major asset classes has been limited, as each group has negatively contributed to performance. While there have been individual contract contributors in each asset class as seen below, these have been more than offset by losses elsewhere in each category. Overall, commodity exposure, specifically long gold and coffee exposure, has been the strongest individual contributors to returns. Gold has benefited from higher and more persistent inflation expectations, as well as a volatility hedge, while coffee has moved higher as market participants require additional caffeine due to the higher levels of volatility (it’s actually more so due to adverse weather conditions in coffee-producing regions and additional demand in emerging markets). Equity exposure has been the main laggard, as several of the main global indexes initially experienced steep losses earlier in the year, only to stage an impressive recovery, which led to many strategies being incorrectly positioned as markets rebounded.

Top/Bottom Contributors by Asset Class

Asset Class	Top Contributors	Top Detractors
Equity	Long IBEX 35/Long DAX	Short Swedish OMX
Bonds	Long Australian 10-Year	Long German 2 and 5 Year
Currencies	Long British Pound/Long Mexican Peso	Long New Zealand Dollar
Commodities	Long Gold/Long Coffee	Short Cocoa

Source : LPL Research, Societe Generale Prime Services 05/23/25

LPL View

Overall, LPL Research maintains a positive view on the managed futures space and this year’s performance as well within their historical drawdowns and performance range during a market backdrop characterized by large daily moves up and down. This type of whipsaw environment limits the efficacy of the average medium-term trend-followers signal, as they end up constantly adjusting their position size and often fail to meaningfully capture any trends occurring. Looking ahead, we believe their uncorrelated return profile and downside mitigation during prolonged drawdowns have an important role in a diversified portfolio.

Managed futures are speculative, use significant leverage, may carry substantial charges, and should only be considered suitable for the risk capital portion of an investor's portfolio.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor's holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

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Jina Yoon

Jina Yoon is LPL Financial’s Chief Alternative Investment Strategist. Her investment career includes over 15 years of experience.