Why Now May Be the Best Time to Consider An Allocation, and How to Do It Without Going All-In
By: Robert Koloshuk
Chief Investment Officer at WaveFront GAM
Managed Futures are, without question, one of the most powerful diversifiers available in modern portfolio construction. The long/short, liquid, trend-based design is uniquely suited to capitalize on both momentum and major dislocations, delivering returns when traditional portfolios struggle. This is why managed futures are core allocations for pensions, endowments, and institutional multi-asset funds worldwide.
But just like any other investment, managed futures experiences difficult periods, and we’re in one now.
Since May 2024, our flagship managed futures program, the WaveFront Global Diversified Program, has experienced a drawdown nearing 20%. It’s uncomfortable. And for advisors, defending an allocation during a period of underperformance can test even the strongest client relationships.
So why talk about this now? Is managed futures broken?
If history is any guide, the real question might be: Is now the best time to get in?
The Case for Buying the Dip in Managed Futures
Managed futures, especially trend-following, thrive on autocorrelation, not noise. Short-lived market shocks that trigger false starts and whipsaws naturally create headwinds.
But the data tells a deeper story.
Historical analysis of the SG Trend Index, a widely followed benchmark for managed futures programs, reveals something powerful: after large drawdowns, Managed Futures often snaps back sharply. In fact, following the 10 largest drawdowns over the past 25years, the average one-year forward return was not only positive, but it was also strong (see Figure 1).
Just look at past dislocations:
- After the GFC reversal in 2008, trend-following delivered +23.5%.
- Following the SVB crisis in March 2023: +13.8%.
- After the Fed tightening cycle of 2004: +25.6%..
Today, after one of the steepest drawdowns in its history (-20.9% as of May 2025), the setup is starting to look familiar:
From Chaos Comes Opportunity
Macro catalysts like the evolving global trade war, rising inflation, and currency realignments are not going away. If anything, the “noise” of 2023–2025 may be laying the groundwork for the next great cycle of trend emergence.
Patience, in this context, isn’t passive. It’s strategic. For investors with long-term horizons, buying into managed futures near the lows has historically paid off.
Yet for many advisors, allocating directly to standalone managed futures strategies is challenging, given their required volatility and the unfamiliar return drivers that clients often misunderstand.
That’s why WaveFront’s All-Weather approach is so revolutionary.
Why All-Weather Makes Managed Futures Easy to Own
At WaveFront, we believe in the power of managed futures. But we also believe in practical implementation, and in building strategies that clients can stick with.
The WaveFront All-Weather Alternative Fund combines managed futures with other return streams (see Figure 2) including real estate, gold, global equities, fixed income, and special situations in a multi-asset, multi-strategy framework designed to adapt across market regimes.
Rather than advisors needing to defend a standalone managed futures allocation during drawdowns, All-Weather embeds it within a broader investment solution that delivers resilience, balance, and growth - even when trend-following is struggling.
We continue to invest in Managed Futures throughout difficult periods, and indeed, we are buyers right now in All-Weather - rebalancing profits from equities, gold, and real estate into trend-following at potentially attractive entry points.
A More Diversified Managed Futures Engine
We recently expanded the WaveFront Global Diversified Program to trade 70+ uncorrelated futures markets across commodities, rates, currencies, and equities, making it Canada’s most diversified managed futures program. This broadening aims to reduce concentration risk while better capturing emerging trends globally.
Even during a drawdown, we’re building for the next regime - because that’s where the real returns are generated.
The “Patience Premium” in Action
The concept of a “Patience Premium” isn’t just academic.
Since launching our managed futures program in 2007, WaveFront has experienced several drawdowns - each followed by powerful recoveries (see Figure 4):
- 2007: After drawdown of -10.5% in 2007, it was followed by +50% gain in 6 months and nearly 30% CAGR over the subsequent 2 years.
- 2011-12: From May 2011 to Nov 2012 the strategy had a drawdown of -20.1%, after which it led to a +20.5% the following year, and 13% annualized return over the next two.
- 2019: Even after a difficult drawdown ending in 2019, the next three years delivered +37% CAGR.
These are not isolated stories. They’re consistent patterns in a strategy designed to monetize dislocations, not avoid them.
Paradigm Shifts Create New Trends
The recent tariff shocks, inflation concerns, USD dominance debates, rising defense spending, AI impacts, and global polarization represent paradigm shifts. Initially, these are difficult to forecast, creating mixed signals. But over the medium term, they set the stage for powerful, investable trends.
For investors with 3+ year horizons, this is a prime time to allocate to managed futures. However, the equity-like volatility needed for managed futures to deliver value, paired with zero correlation to what clients understand, can make it hard for clients to stay the course.
WaveFront’s All-Weather Fund solves this by allocating ~25% of its risk exposure to managed futures within a framework that helps clients stay invested while reducing risk and enhancing long-term returns.
Final Thoughts: Embracing the Opportunity
If you’ve ever told a client, “Buy the dip,” then now is the time to take your own advice.
Managed futures are in a drawdown. But that’s precisely when the best opportunities have historically emerged. With macro volatility rising, stagflation risk present, and policy uncertainty rampant, trend-following strategies may be poised for a powerful resurgence.
Whether you allocate directly to the WaveFront Global Diversified Fund, or access managed futures via the WaveFront All-Weather Alternative Fund, we believe the case is strong:
- Diversified global trend exposure
- Near-zero correlation to equities and bonds
- Historical evidence of strong post-drawdown performance
- Embedded risk management and liquidity
It’s not about calling the bottom. It’s about understanding cycles, positioning ahead of them, and staying the course - and WaveFront All-Weather can help you do that, automatically, on your clients’ behalf.
Learn more about the WaveFront All-Weather Alternative Fund here
IMPORTANT DISCLAIMER: Past performance is not necessarily indicative of future results. Futures trading is speculative and involves substantial risk. Potential investors should note that the value of an investment may go down as well as up. There is a risk that an investment will be lost entirely or in part. An investment in the Program is speculative and involves a high degree of risk and is not intended as a complete investment program. There is no guarantee of trading performance. An investment should only be made after consultation with independent qualified sources of investment and tax advice. This communication is not and under no circumstances is to be construed as an invitation to make an investment in any WaveFront program nor does it constitute a public offering to sell a fund or program. Investors should review the Offering Documents of any WaveFront Program or Fund in their entirety for a complete description of WaveFront’s programs or Funds. Applications to investwill only be considered on the terms set out in the Offering Documents. The information in this material is subject to change without notice and WaveFront will not be held liable for any inaccuracies or misprints. The Monthly Rates of Return above are the composite weighted net returns of all client accounts of WaveFront managed pursuant to the WaveFront Global Investment Program, computed pursuant to methodologies approved by the U.S. Commodity Futures Trading Commission (CFTC).
WaveFront is officially registered with both the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). Notwithstanding this, it’s important to note that the WaveFront Global Diversified Program does not actively solicit or accept U.S. investors at this time. All information and resources provided by WaveFront are designed with the exclusive purpose of addressing the needs of non-U.S. investors. They should not be interpreted as an offer or an enticement to purchase securities within the United States or to U.S. persons.
