ETF Portfolio Rebalance
Innova Wealth Partners Dramatically Rebalances Portfolio, Reducing DBMF and Increasing T-Bill ETF Stake
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Key Points
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The iMGP DBi Managed Futures Strategy ETF (DBMF) is based on the Goldman Sachs Hedge Fund VIP index.
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Other hedge funds also adjusted their DBMF positions in the quarter, including MBM Wealth Consultants LLC and Capital Advisors Ltd. LLC initiating new positions, MidAtlantic Capital Management Inc. purchasing a new stake in the fourth quarter, and LFA Lugano Financial Advisors SA increasing its holdings by about 50.1% in the fourth quarter, with Lloyd Advisory Services LLC also taking a new stake in the fourth quarter.
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Innova boosted its SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) stake by 465.4% to 22,679 shares, worth about $2.08 million, making BIL roughly 1% of its portfolio and about the 28th largest position.
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Innova reduced its SPDR Dow Jones International Real Estate ETF (RWX) stake by 75.6% to 20,654 shares, valued around $550,000, representing about 0.21% of its portfolio.
Innova Wealth Partners slashed its stake in the iMGP DBi Managed Futures Strategy ETF (DBMF) by 92.2% in the first quarter of 2024, selling roughly 395,000 shares and leaving just 33,574 shares worth about $1.0 million, according to MarketBeat. At the same time, the Newtown, Pennsylvania-based firm pumped up its position in short-term Treasury bills by 465%, signaling a clear shift toward capital preservation.
The moves are part of a broader rebalancing of Innova's $211 million portfolio, which held 166 positions as of March 31, 2024, per Finviz. The firm moved money out of complex alternatives and international real estate and into the simplest, safest yield available: U.S. T-bills paying around 5%.
From Managed Futures to T-Bills: The Big Swap
Innova's big winner in this rebalancing was the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL). The firm boosted its BIL stake by 465.4% to 22,679 shares, now worth about $2.08 million — making it roughly the 28th largest position and about 1% of the total portfolio, according to Fintel. That is a dramatic vote of confidence in short-term Treasuries.
The logic is straightforward. The Federal Reserve's "higher-for-longer" rate stance pushed short-term T-bill yields above 5% in early 2024. For a firm serving pre-retirees and retirees, that kind of risk-free return is hard to ignore. Locking in 5% beats the unpredictability of trend-following hedge fund strategies, especially after a rough 2023 for managed futures.
Why Innova Walked Away From DBMF
DBMF is not a simple fund. It tries to copy the returns of large commodity-trading hedge funds using futures contracts — a strategy called replication. Andrew Beer, co-founder of Dynamic Beta investments, has called it a "hedge fund killer" because it charges just 0.85% per year instead of the typical hedge fund fees, as noted by HedgeNordic.
But 2023 was a hard year for the strategy. Sudden reversals in interest rate trends caused managed futures funds to struggle, according to ETF Trends. When trends stop being smooth and predictable, replication models can lag badly. For an RIA explaining performance to retirement clients, that complexity becomes a liability — especially when a 5% T-bill yield sits right next door.
International Real Estate Also Takes a Hit
Innova also cut its stake in the SPDR Dow Jones International Real Estate ETF (RWX) by 75.6%. The firm kept only 20,654 shares, worth about $550,000 — just 0.21% of its portfolio, according to Defense World. RWX holds REITs in developed and emerging markets outside the U.S.
Global interest rate hikes hit international real estate hard. Higher rates push up borrowing costs and compress property valuations, making funds like RWX less attractive. With rate pressure continuing into early 2024, Innova's decision to pull back makes sense as a defensive move.
Innova Was Not Alone, But Its Scale Stood Out
Other firms moved in different directions on DBMF during the same period. MBM Wealth Consultants LLC and Capital Advisors Ltd. LLC both opened new positions in the fund. LFA Lugano Financial Advisors SA grew its DBMF stake by 50.1% in the fourth quarter of 2023. Lloyd Advisory Services LLC also took a new stake at that time, per MarketBeat.
Still, Innova's sale of roughly 395,000 shares was large for a mid-sized registered investment advisor. Fintel noted it signals a deliberate change in Innova's core alternatives model — not a minor trim. If the Fed starts cutting rates in late 2024 or beyond, the 5% BIL yield will shrink, and firms like Innova may need to rotate back into more aggressive strategies.
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