Your market exposure may be working.
Is your capital?
Our framework is designed around a different premise: that the same capital used to maintain your intended market exposure through regulated futures contracts is simultaneously deployed into a separately-managed systematic overlay engineered to generate returns independently of market direction. Your market exposure stays intact. Your capital does not sit idle.
It can't give you what the market leaves behind.
A low-cost ETF delivers market exposure — and stops there. The same capital that gives you market exposure can also be working independently of market direction — simultaneously. NovoDyn's Structural Alpha Program is designed to pursue what the market leaves on the table.
NovoDyn's program is designed to make the investor's capital work in two ways simultaneously. First, the investor's chosen market exposure is synthetically replicated, allowing the portfolio to maintain participation in that market without committing the full amount of capital that a traditional cash allocation would require. Second, the capital freed by that structure is deployed across six independent systematic engines whose returns are intended to have little or no correlation to the investor's selected market exposure.
Those engines seek returns from mean reversion, carry and yield differentials, structural spread relationships, term structure and curve inefficiencies, statistical arbitrage, and relative value positioning. These are low-correlation opportunities that can exist whether markets are rising, falling, or moving sideways.
The result is a return-stacking structure in which the same investment capital performs double duty: it preserves the investor's chosen market exposure while also supporting a separate return stream designed to operate independently of that exposure.
For an investor who already participates in the market, that second return stream is not a replacement for the market allocation — it is what transforms the allocation into a more genuinely diversified portfolio.
From Market Exposure to a More Efficient Structure
Investing in futures contracts preserves your intended asset allocation while unlocking capital that ETFs, passive index funds, and mutual funds keep tied up.
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 NovoDyn Structural Alpha Program
Institutional investors have long used futures contracts to maintain intended portfolio exposure at a fraction of the capital cost — deploying available capital into a separate, low-correlation source of alpha alongside existing market participation. This approach is known as portable alpha or return stacking.
The Structural Alpha Program delivers three things no managed futures ETF can offer: a non-trend-following overlay built around your specific portfolio, market exposure you select, and, for Qualified Clients, a performance-fee structure designed so ordinary appreciation in that selected market, by itself, does not generate a NovoDyn performance fee. These features are only possible in a separately-managed account structure — which is why the program is offered exclusively through individually-segregated client accounts.
Designed for Investors Seeking More Than the Performance of the Market
- Separately-Managed Account (SMA) structure — your assets are held in your own individually-segregated account, never pooled or commingled with other investors, in accordance with applicable CFTC and SEC segregation requirements
- Systematic managed futures strategies intended to complement a broader portfolio as an alternative investment component
- Two distinct return drivers: futures contracts seeking to replicate your intended market exposure, and the NovoDyn systematic overlay operating independently of market direction
- Capital-efficient market exposure implemented through regulated futures contracts
- Customizable to your portfolio — market exposure, replication level, overlay sizing, and available asset classes are each determined by the investor. No two client implementations need be identical.
- Systematic, rules-based implementation supported by institutional-grade infrastructure
- Transparent account visibility through established FCM and, where applicable, securities brokerage relationships
- You may cancel program participation anytime with two business days' notice
The Structural Alpha Program is designed to work alongside what you already own — adding a source of alpha your current holdings cannot provide.
Exposures
Using
Futures
Pre-Launch Preview
The program is currently undergoing testing prior to launch.
Futures-Based Portfolio Construction
Regulated futures contracts are used to replicate the asset allocation selected for the investor's portfolio, including broad-based index exposures where suitable. This allows less cash to be tied up in fully-invested securities and ETF positions while maintaining intended market exposure.
- Capital-efficient market exposure
- Regulated futures implementation
- Ongoing margin and collateral monitoring
- Structured reporting of exposure metrics
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.
Structural Alpha Component
The Full Overlay makes six systematic engines available across regulated futures, options, and securities/ETFs. Investors electing the Futures-Only Overlay participate only in NovoDyn's four futures-based engines; the equity-pairs and ETF strategies are excluded. The engines independently evaluate structural spread relationships, mean reversion dynamics, carry and yield differentials, term structure and curve inefficiencies, statistical arbitrage, and relative-value opportunities. Capital is deployed only when an engine's predefined entry criteria are met. Positions are designed to operate independently of broad market direction, and NovoDyn's research platform continues to develop 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
Choose the Scope of Your Systematic Overlay
NovoDyn's Full Overlay combines four futures-based strategies with two strategies that may trade securities. Investors may elect either the Full Overlay or a Futures-Only Overlay. The election determines which systematic engines are available to the account, which account relationships are required, and which fee schedule applies.
Futures + Securities Strategies
Provides access to all six NovoDyn systematic engines: four futures-based engines, the equity-pairs strategy, and the ETF strategy used in select lower-opportunity environments.
- All six systematic engines are available, subject to the program's trading rules and opportunity set.
- An FCM account is required, together with a securities brokerage account for strategies that trade securities.
- Qualified Clients may use NovoDyn's performance-aligned fee schedule.
- Non-Qualified Clients use the applicable asset-based fee schedule: 2.80% annually when not represented by an RIA, or 1.80% annually when represented by an RIA; no performance fee applies.
Commodity Interests Only
Limits the account to NovoDyn's four futures-based systematic engines. The equity-pairs and ETF strategies are excluded, and NovoDyn does not direct securities transactions under this election.
- Only an FCM account is required for the trading program; a separate securities brokerage account is not required.
- Qualified Client status is not required for the Futures-Only performance fee.
- If you are not represented by an RIA: 1% annual management fee plus 20% of fee-eligible performance, subject to a high-water mark.
- If you are represented by an RIA: 20% of fee-eligible performance, subject to a high-water mark, with no additional NovoDyn management fee.
- The performance fee is based solely on fee-eligible results from the permitted futures-based program; securities gains, losses, or appreciation are not included.
Different opportunity sets. The Futures-Only election removes two systematic engines from the account and therefore may produce materially different results from the Full Overlay. An investor may later request a change in overlay scope, subject to applicable eligibility, account, documentation, and approval requirements before the additional strategies are activated.
Performance-Aligned Fee Structure
Accounts using NovoDyn's performance-aligned fee schedule pay a performance fee of 20% of fee-eligible performance, subject to a high-water mark. For clients not represented by an RIA, an additional 1% annual management fee applies. For clients represented by an RIA, no additional NovoDyn management fee applies.
The performance-aligned schedule is available to Qualified Clients using the Full Overlay and to clients electing the Futures-Only Overlay. The client's selected market exposure determines the corresponding underlying index or reference market used in the performance-fee calculation. Fee-eligible performance combines the gain or loss from the applicable 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 the selected market, by itself, does not generate a NovoDyn performance fee.
Options for Non-Qualified Clients: A Non-Qualified Client may choose the Full Overlay, which includes the securities-based strategies and uses the applicable asset-based fee schedule — 2.80% annually when not represented by an RIA or 1.80% annually, prorated monthly, when represented by an RIA, with no performance fee. Alternatively, the client may elect the Futures-Only Overlay, which excludes the equity-pairs and ETF strategies and uses the performance-aligned CTA fee schedule described above.
Compensation Tied to Alpha, Not Market Direction
NovoDyn's performance fee, when applicable under the client's selected overlay scope, is designed to compensate NovoDyn for fee-eligible performance, not simply for a rising market. The theoretical return attributable to the client's selected market exposure is removed from the calculation. As a result, appreciation in the selected market, by itself, does not generate a performance fee for NovoDyn.
Hedging, Financing Terms & Margin Discipline
In the Structural Alpha overlay, hedging, financing terms, margin utilization, collateral sufficiency, and liquidity are continuously monitored. Positions may be reduced, unwound, or rebalanced when market conditions alter capital efficiency or margin requirements.
Which fees apply to me?Section 1256 Tax Treatment vs. ETF Wrappers
Regulated futures contracts held in your 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 like the systematic overlay, 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 your 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. You should confirm the specific tax treatment of any ETF or fund under consideration in its prospectus and with your 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.
Capital Use Driven By Market Conditions
The allocation to NovoDyn-managed systematic strategies may increase during stronger structural opportunity environments and decrease when opportunity is more limited.
When conditions are less favorable, capital may be held in cash equivalents, money market instruments, or other lower-risk investments consistent with the investor's risk tolerance and overall investment objectives.
Systematic Oversight and Monitoring
Execution is governed by systematic rules and ongoing monitoring through NovoDyn's regulated FCM and, where applicable, securities brokerage infrastructure. Counterparty and custodial arrangements are selected based on regulatory standing, operational capabilities, and risk management infrastructure.
- Broker-level covenant and risk monitoring
- Continuous tracking of margin utilization and collateral sufficiency
- Structured performance and exposure reporting
Your Account, Your Assets
Your assets are held in your own individually-segregated account — never pooled or commingled with other investors. Where the program utilizes both futures and securities positions, assets are maintained in accordance with applicable CFTC and SEC segregation requirements. NovoDyn holds trading authority only and never custody of your assets.
Transparent, account-level visibility and structured performance reporting are provided through the applicable regulated FCM and, where securities are used, brokerage infrastructure.
Frequently Asked 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. Returns are generated systematically through rules-based execution when predefined conditions are met, independent of whether markets rise, fall, or remain flat.
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 investor's specific portfolio and objectives, including the investor's choice of overlay scope. Full Overlay: all six engines are available. Qualified Clients may use NovoDyn's performance-aligned fee schedule; Non-Qualified Clients use the applicable asset-based fee schedule — 2.80% annually when not represented by an RIA or 1.80% annually when represented by an RIA. Futures-Only Overlay: the equity-pairs and ETF strategies are excluded, and the performance-aligned CTA fee schedule is available without relying on Qualified Client status — 1% annual management plus 20% of fee-eligible performance for clients not represented by an RIA, or 20% of fee-eligible performance with no additional NovoDyn management fee for RIA-represented clients, in each case subject to a high-water mark. The structure therefore differs from a standardized ETF in customization, market-exposure design, overlay scope, and separately-managed account implementation.
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.
How is NovoDyn's performance fee calculated?
For accounts using NovoDyn's performance-aligned fee schedule — Qualified Clients using the Full Overlay and clients electing the Futures-Only Overlay — the 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. For a Futures-Only account, only results from the permitted futures-based program enter the performance-fee calculation; securities gains, losses, or appreciation are not included. If a client elects No Replication, there is no market-exposure return to subtract; fee-eligible performance is based on the applicable systematic program result, subject to the same high-water-mark provisions.
How are risk and margin managed?
Margin utilization, financing terms, liquidity, and collateral sufficiency are continuously monitored, and positions may be reduced or unwound under predefined capital preservation protocols.
Is the additional return guaranteed?
No. Any incremental return depends on market conditions, structural opportunity, execution, financing terms, and margin requirements. The strategy has defined entry criteria and return thresholds. Details are available upon request.
What happens in a period where the systematic overlay generates no alpha?
The futures-based replication continues to maintain your 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. For accounts using the performance-aligned fee schedule, NovoDyn earns a performance fee only on positive fee-eligible performance, subject to the high-water mark. Non-Qualified Clients electing the Full Overlay use the applicable asset-based fee schedule — 2.80% annually when not represented by an RIA or 1.80% annually when represented by an RIA — and no performance fee applies. Non-Qualified Clients may instead elect the Futures-Only Overlay, which excludes the equity-pairs and ETF strategies and uses the applicable performance-aligned CTA fee schedule.
How do I get started?
The first step is to request investor program materials by clicking the button on this page. You will be asked to complete a brief 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 program, answer questions, and walk you through the account opening process at your pace.
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. NovoDyn offers two overlay scopes. The Full Overlay makes all six engines available, including the equity-pairs and ETF strategies; Qualified Clients may use the performance-aligned fee schedule, while Non-Qualified Clients use the applicable asset-based fee schedule — 2.80% annually when not represented by an RIA or 1.80% annually, prorated monthly, when represented by an RIA. The Futures-Only Overlay excludes NovoDyn-directed securities transactions and limits the account to the four futures-based engines; Qualified Client status is not required for that election's performance fee. For clients not represented by an RIA, the Futures-Only fee is 1% annual management plus 20% of fee-eligible performance; for RIA-represented clients, it is 20% of fee-eligible performance with no additional NovoDyn management fee, in each case subject to a high-water mark. Fee-eligible performance is calculated using the applicable systematic overlay result plus actual gain or loss on replication futures less the theoretical gain or loss attributable to the corresponding client-selected market exposure. For Futures-Only accounts, securities gains, losses, or appreciation are excluded from the performance-fee calculation. 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.