They need you to do something ETFs can't.
Passive investment products have made market exposure broadly accessible and wealth advisory services increasingly commoditized. NovoDyn's framework helps advisors respond to that challenge through a structure designed to deliver capabilities that standardized ETF structures cannot provide — a non-trend-following systematic overlay coordinated with your client's specific portfolio, market exposure you select, and a performance fee structure designed so ordinary appreciation in that selected market, by itself, does not generate a NovoDyn performance fee. That combination does not exist in an ETF — which means it can only exist because of you. In a world where market exposure costs three basis points, the advisor who can construct something a client genuinely cannot access on their own is indispensable.
The NovoDyn Structural Alpha Program allows advisors to replicate a client's intended market exposure through regulated futures contracts while allocating available capital to a separately-managed systematic overlay. Unlike standardized return stacking products, the program is built around the advisor's portfolio construction — not a fixed strategy applied uniformly to every client.
Replicating your clients' intended asset allocation using futures contracts unlocks capital that would otherwise be fully invested in ETFs, passive index funds, mutual funds, and other investment vehicles.
Your Market Replicated
Cash & Money Market Buffer
When prevailing conditions are less favorable, unallocated capital is directed toward cash equivalents or money market instruments.
NovoDyn Systematic Overlay
NovoDyn-managed components designed to provide diversified, low-correlation return streams — independent of broad equity market direction.
* "Higher-opportunity" and "lower-opportunity" refer to NovoDyn's assessment of prevailing market conditions relative to the program's defined entry criteria. See FAQ below for additional detail.
The Portfolio Capability Your Clients Can't Get Without You.
A separately-managed systematic overlay — non-trend-following, portfolio-specific, and priced only on results — designed to seek returns from quantitative market patterns rather than market direction.
Maintain your clients' intended market exposure through regulated futures while deploying freed capital into a non-trend-following systematic overlay — structured so ordinary appreciation in the market exposure you select, by itself, does not generate a NovoDyn performance fee. That is the portfolio capability your clients cannot get without you.
The Portfolio Architecture Behind the Advisor Framework
Institutional investors have long used futures contracts to replicate intended portfolio exposure at a fraction of the capital cost — unlocking capital for deployment into a separate, low-correlation source of alpha alongside existing market participation. This approach is known as portable alpha or return stacking.
Most portable alpha and return stacking products available to advisors today use trend-following strategies for the alpha overlay. NovoDyn's systematic overlay is designed differently — six independent systematic engines deriving returns from quantitative market patterns across structural pricing patterns, mean reversion, relative value relationships, carry dynamics, statistical arbitrage, and term structure inefficiencies — rather than market direction or trend-following strategies. For a client who already holds a trend-following managed futures product, that distinction matters beyond diversification from equities alone: NovoDyn's overlay is designed to behave differently from the trend-following exposure your client may already own, not simply to replicate it under a different name.
ETFs and passive index products are efficient tools for delivering broad market exposure — and they remain foundational components in many advisor-managed portfolios. The Structural Alpha Program operates in different territory: a separately-managed account structure that allows the overlay to be built around the advisor's portfolio construction rather than applied uniformly across all clients. That structural difference is what makes customization, market-exposure flexibility, and performance-aligned fees possible — none of which can exist within a pooled, standardized ETF structure.
Designed for Advisors Who Actively Manage Client Portfolios
- You determine the client's targeted asset allocation and market exposure
- NovoDyn replicates the asset allocation through regulated futures where appropriate
- Two distinct return drivers: futures-based replication of the client's intended market exposures, and the NovoDyn systematic overlay operating independently of market direction
- Customizable to each client's portfolio — market exposure, replication level, overlay sizing, and available asset classes are each determined by the advisor. No two client implementations need be identical.
- Systematic, rules-based implementation supported by institutional-grade infrastructure
- NovoDyn charges no management fee to advisors — compensation is performance-based only, earned on fee-eligible performance
- Separately-Managed Account (SMA) structure — client assets are held in individually-segregated accounts at their Futures Commission Merchant (FCM) for futures positions and at a regulated broker-dealer for any securities positions, in accordance with applicable CFTC and SEC segregation requirements
- You remain the primary relationship manager — NovoDyn operates exclusively within the framework you establish for each client
- Reporting Integration: NovoDyn transmits daily valuations directly to the advisor's portfolio-reporting platform of choice
This managed futures framework is designed to extend what you already do — adding a capability your clients cannot access anywhere else.
Exposures
Using
Futures
The Fee Comparison That Changes the Conversation
NovoDyn charges no management fee to advisor-represented client accounts. For Qualified Client accounts, compensation is a performance fee of 20% of fee-eligible performance, subject to a high-water mark — meaning NovoDyn earns nothing unless your client's account produces positive fee-eligible performance.
Your client's selected market exposure determines the corresponding underlying index or reference market used in the calculation. Fee-eligible performance combines the gain or loss from the systematic overlay with the actual gain or loss on the futures used to implement that market exposure, then subtracts the theoretical gain or loss attributable to the corresponding selected market exposure over the same period. As a result, ordinary appreciation in your client's selected market, by itself, does not generate a NovoDyn performance fee.
Your standard advisory fee structure is preserved across the full client relationship. NovoDyn's compensation is tied to fee-eligible performance — not to participate in your economics.
Note Regarding Non-Qualified Clients: SEC Rule 205-3 limits performance-based compensation regardless of strategy for Non-Qualified Client accounts. An annual flat fee of 1.80% of assets under management, prorated monthly, applies in lieu of a performance fee, regardless of replication level. NovoDyn still charges no management fee to advisor-represented accounts — but the performance alignment that defines our preferred fee structure is not available for Non-Qualified Client accounts. That is a regulatory constraint, not a program limitation.
Whether working with Qualified or Non-Qualified Clients, NovoDyn's role remains the same: pursue fee-eligible performance on the market exposure you select.
Your Clients Remain Your Clients
NovoDyn works in partnership with financial advisors and acknowledges the advisor as the primary relationship manager. Clients introduced through an advisor remain the advisor's clients — NovoDyn does not solicit or establish direct advisory relationships with those clients outside the advisor's involvement.
NovoDyn's role is to make your client's portfolio more capable — not to replace your relationship with the client.
Advisors may cancel or modify a client's participation in the program with two business days' notice.
Section 1256 Tax Treatment vs. ETF Wrappers
Regulated futures contracts held in the account are subject to IRC Section 1256, under which gains and losses are marked to market annually and automatically treated as 60% long-term and 40% short-term — regardless of actual holding period. For an actively-managed, short-holding-period strategy, this converts what would otherwise be short-term gain taxed at ordinary rates into a blended rate that is meaningfully more favorable.
This treatment generally passes through directly to the client's account. By comparison, many managed futures ETFs and mutual funds obtain futures exposure through a wholly-owned offshore subsidiary structured to satisfy RIC qualifying-income requirements; when that subsidiary's gains are distributed to shareholders, the 60/40 character is typically converted to ordinary income in the process.
This is a structural distinction in how futures exposure is held, not a claim about performance. Advisors and clients should confirm the specific tax treatment of any ETF or fund under consideration in its prospectus and with their own tax advisor.
What This Does — and Doesn't — Mean
The 40% short-term portion remains taxed at ordinary rates; this is a rate improvement relative to fully short-term treatment, not capital-gains treatment across the board.
Annual mark-to-market means tax can be owed on unrealized gains in years a position remains open — a different timing profile than an ETF, where taxation is typically deferred until sale and often reduced further for buy-and-hold investors through in-kind redemption mechanics. Losses receive the same 60/40 split. A number of states do not recognize the federal 60/40 treatment and tax the full gain as ordinary income at the state level.
Note Regarding Qualified Accounts: Section 1256 treatment has no bearing on IRAs, 401(k)s, or other tax-qualified accounts. All gains inside those accounts are tax-deferred (or tax-free for Roth accounts) until distribution regardless of character, and traditional-account distributions are taxed as ordinary income upon withdrawal. This comparison applies to taxable accounts only.
Margin, Liquidity & Exposure Discipline
Investing in futures contracts introduces margin, liquidity, basis, financing, and execution risks that must be continuously monitored. NovoDyn tracks margin utilization, collateral sufficiency, financing terms, and exposure levels under predefined operational protocols.
Defined Authority & Oversight
Advisors continue managing client portfolios as they normally would while NovoDyn handles futures implementation, collateral monitoring, and systematic overlay execution within the agreed framework. NovoDyn's trading authority is limited strictly to futures replication and overlay management — structured account reporting is provided throughout.
Custody, FCM & Execution
Execution and capital management are conducted through regulated brokerage and Futures Commission Merchant (FCM) relationships. Counterparty and custodial arrangements are selected based on regulatory standing, operational capabilities, and risk management infrastructure.
Structural Alpha Component
Six systematic engines continuously evaluate structural pricing patterns across regulated futures, securities, and exchange-traded instruments — each independently identifying opportunities across structural spread relationships, mean reversion dynamics, carry and yield differential strategies, term structure and curve inefficiencies, statistical arbitrage, and relative value positioning. Capital is deployed into the overlay only when an engine's predefined entry criteria are met. Positions are designed to maintain low correlation to broad market direction — most through offsetting hedged structures or statistical relationships that revert over time, and the statistical arbitrage engine through short-term directional positions that are themselves uncorrelated to broad market movement. NovoDyn's research platform actively develops additional systematic engines as quantitative research and market conditions identify new structural opportunities.
- Overlay allocation varies with portfolio design and market opportunity
- Disciplined financing and margin controls
Pre-Launch Preview
The program is currently undergoing testing prior to launch.
A portfolio overlay isn't always the goal. Sometimes you want access to its engines—directly.
Investors who want access to NovoDyn's systematic trading engines without synthetically replicating a market portfolio may select the program on a standalone basis.
During onboarding, select "No Replication" under "Replication Range" in the Replication Calculator. This tells NovoDyn that you want a standalone systematic allocation rather than a portfolio-replication overlay.
Common Questions
What is the Structural Alpha Program systematic overlay?
The systematic overlay is the portion of the portfolio allocated to NovoDyn-managed quantitative strategies designed to seek returns from quantitative market patterns rather than traditional market direction.
What is meant by "higher-opportunity" and "lower-opportunity" environments?
NovoDyn's systematic engines continuously monitor regulated futures and securities markets for structural pricing patterns and conditions — including structural spread relationships, mean reversion conditions, and term structure inefficiencies — deploying capital into the systematic overlay when defined entry criteria are met and reducing exposure to cash equivalents or money market instruments when those conditions are absent. "Higher-opportunity" environments are those in which the program's engines identify sufficient structural conditions to justify overlay deployment. "Lower-opportunity" environments are those in which conditions do not meet the program's defined thresholds. No specific return level or frequency of higher-opportunity conditions is guaranteed.
What is the difference between the NovoDyn program and a managed futures ETF?
A managed futures ETF delivers systematic futures exposure within a fixed, standardized structure — the same strategy applied to every investor regardless of their existing portfolio or objectives. The NovoDyn Structural Alpha Program is a separately-managed account framework built around each client's specific portfolio — the market exposure, replication level, overlay sizing, and available asset classes are all advisor-determined. Additionally, a managed futures ETF charges an annual management fee regardless of performance. NovoDyn charges no management fee to advisors — for Qualified Client accounts, compensation is a performance fee of 20% of fee-eligible performance only, and nothing else. The structures are fundamentally different in design, customization, and fee alignment.
What is portable alpha and how does it work?
Portable alpha is an institutional portfolio technique that separates market exposure from alpha generation. Rather than fully investing capital in securities to obtain market exposure, futures contracts are used to replicate that exposure at a fraction of the capital cost — freeing capital for deployment into a separate strategy designed to generate returns independently of market direction. The result is a portfolio that participates in the market as intended while simultaneously pursuing additional returns from a low-correlated source. NovoDyn's Structural Alpha Program is built on this principle, adapted for advisor-managed client portfolios and self-directed investors through a separately-managed account structure.
Is the additional return guaranteed?
No. Any incremental return depends on market conditions, execution, financing terms, and margin requirements. The strategy has defined entry criteria and return thresholds. Details are available to advisors upon request.
How is my advisory fee structure treated?
You retain your standard advisory fee structure across the full client portfolio. NovoDyn's compensation is limited to a performance-based fee calculated on fee-eligible performance, subject to a high-water mark and the terms of the applicable advisory agreement and disclosure documents.
How is NovoDyn's performance fee calculated?
For Qualified Client accounts, your client's selected market exposure determines the corresponding underlying index or reference market used in the calculation. NovoDyn records the futures execution price and the contemporaneous level of that reference market when the replication position is established and when it is closed or measured for fee purposes. Fee-eligible performance equals the systematic overlay gain or loss, plus the actual gain or loss on the replication futures, less the theoretical gain or loss attributable to the corresponding selected market exposure over the same period. The 20% performance fee applies only to positive fee-eligible performance and is subject to a high-water mark. If a client elects No Replication, there is no market-exposure return to subtract; fee-eligible performance is based on the systematic program's result, subject to the same high-water-mark provisions.
What happens in a period where the systematic overlay generates no alpha?
The futures-based replication continues to maintain your client's intended market exposure throughout. In periods when qualifying overlay opportunities are not present, the overlay allocation may be reduced and capital may be held in cash equivalents or money market instruments. Your client continues to participate in their chosen market exposure. For Qualified Client accounts, NovoDyn earns a performance fee only on positive fee-eligible performance, subject to the high-water mark — your client's interests and NovoDyn's compensation are structurally linked.
How does an advisor get started?
The first step is to request advisor diligence access by clicking on the button on this page. You will be asked to complete a brief investor information form so NovoDyn can send the appropriate program materials and Disclosure Document. From there, a member of the NovoDyn team will follow up directly to discuss the framework, answer questions, and walk you through the onboarding process at your pace.
What if a client does not qualify as a Qualified Client?
NovoDyn's performance-based fee structure requires that clients qualify as Qualified Clients under SEC Rule 205-3. Effective June 29, 2026, a Qualified Client must have at least $1.4 million in assets under management with NovoDyn Advisors at the time of entering into the advisory agreement, or a net worth exceeding $2.7 million (excluding the value of the primary residence and certain related debt). For clients who do not meet the Qualified Client threshold, NovoDyn charges an annual flat fee of 1.80% of assets under management, prorated monthly, in lieu of a performance fee, regardless of replication level. NovoDyn does not charge a management fee to advisor-represented accounts regardless of client qualification status.
Strategy Risk. References to "non-directional," "low-correlated," "structural pricing patterns," and "quantitative market patterns" describe the program's design objectives and do not imply the absence of risk. The strategy may experience significant volatility and losses during periods of market stress, spread widening, or unexpected correlation shifts. These conditions can change rapidly, and there is no assurance the strategy will profit from identified patterns. Non-directional positioning does not guarantee reduced risk or positive returns in any market environment. Firm/proprietary trading experience and limited early investor participation should not be viewed as indicative of future results.
Derivatives, Leverage, and Instrument Risk. The program's strategies involve the use of derivatives, embedded leverage, futures options, securities options, and exchange-traded funds (ETFs) as selective tactical instruments. These approaches can increase portfolio volatility, magnify losses, and introduce risks — including margin risk, collateral risk, basis risk, liquidity risk, time decay, assignment risk, tracking error, and execution risk — not associated with traditional, cash-only investment portfolios. Options positions are subject to expiration, time decay, and the risk of total loss of premium paid. ETFs and options, when used, serve as tactical instruments within the overlay, not as the primary strategy vehicle. Collateral assets may decline in value simultaneously with overlay losses, compounding overall portfolio impact.
Operational and Fee Disclosures. References to "rules-based," "systematic," or "structured" implementation describe the program's operational methodology and do not imply reduced risk or predictable outcomes. The terms "portable alpha" and "return stacking" are used descriptively and do not imply guaranteed positive returns. For Qualified Client accounts, NovoDyn's performance fee is based on fee-eligible performance, calculated as systematic overlay gain or loss plus actual gain or loss on replication futures less the theoretical gain or loss attributable to the corresponding client-selected market exposure, subject to high-water-mark provisions. NovoDyn charges no management fee to advisor-represented accounts; Qualified Clients pay the performance fee described above and nothing else, while Non-Qualified Clients pay a flat annual fee of 1.80% of assets under management, prorated monthly, and no performance fee. Fee structures may vary by program and investor type. Prospective investors should review the applicable Disclosure Document for complete fee terms before investing.
General Disclosure and Registration. This website is for informational purposes only and does not constitute an offer to sell or solicitation to buy any commodity interest or security, and should not be relied upon as investment advice. Any offer will be made only through official offering documents, which should be carefully reviewed before investing. This website is intended solely for residents of the United States and does not constitute a solicitation or offer to any person in any jurisdiction outside the United States, including the European Economic Area. NovoDyn Advisors, LLC is registered with the CFTC as a Commodity Trading Advisor, is a Member of the National Futures Association (NFA ID #0435960), and is registered as an Investment Adviser (CRD #156451). Registration does not imply a certain level of skill or training. Trading futures and derivatives involves substantial risk of loss, is not suitable for all investors, and past performance is not necessarily indicative of future results.