Capital Efficiency ETFs – Expanding Beyond Traditional Stock Portfolios

For traders and investors looking for returns and improved capital efficiency beyond traditional stock-only portfolios, a growing number of exchange-traded funds (ETFs) offer strategies that blend core equity exposure with futures-based or options-based overlays. 

Traditionally, futures and options overlays are more active strategies pursued by both individual and institutional traders.

These funds use derivatives to “stack” additional return streams (such as bond futures, commodities, or managed futures) on top of an equity base.

The goal is to boost overall return, diversify exposures, and manage risk better than conventional single-asset ETFs.

However, not everyone has the time or know-how to pursue these strategies. Moreover, some want to benefit from them passively.

This is where these types of ETFs come into play. 

Key Takeaways – Capital Efficiency ETFs

• Capital-efficient ETFs use futures and options overlays to stack extra return streams (e.g., bonds, gold, managed futures) on top of equities.
  
• GDE (WisdomTree) combines 90% US stocks with 90% gold futures, creating 180% notional exposure with just $100 of capital.
  • CAGR since inception: ~23.8%, expense ratio 0.20%.
  • In our backtest, we’d expect this to yield double-digit returns per year. But please check risk tolerance (~23% more volatile than stocks alone).
    • Over 54 years, a 15.87% leveraged CAGR would have turned $10k into ~$28.9M versus ~$2.4M at 10.78% (in stocks).
      
• NTSX, NTSI, NTSE overlay Treasuries on US, international, and emerging equities (leveraged 60/40-like style).
  
• RSST/RSBT stack managed futures with stocks or bonds for diversification.
  
• OVL, WTPI, Innovator Floor ETFs use option overlays for income/risk control.
  
• YGLD overlays gold futures with income strategies.
  
• Expense ratios range from 0.20% (NTSX, GDE) to ~1% (RSST/RSBT).
• We have a complete summary table of the ETFs we cover in the Appendix to the article, with this information contained in this article.

GDE: A Unique Gold Plus Equity Overlay

One of the most popular examples of this approach is the WisdomTree Efficient Gold Plus Equity Strategy Fund (GDE). 

The fund invests about 90% in large-cap US equities and overlays an additional 90% notional exposure to gold futures. Ten percent is kept in cash collateral. 

This creates a combined notional exposure of roughly 180% while only using $100 of actual capital.

The benefit of this layered structure of course is clear. Those who own the fund get exposure to two asset classes, equities and gold, without needing to dedicate capital separately to each. 

In most approaches, if you have $1,000 to put into the markets and you want equal allocation to two assets, plus 10% in cash, you’d put $450 into each.

Here, you put $900 into stocks and put $900 into gold futures (gold doesn’t generally come sized that small in terms of the futures market, but as an example), and $100 in cash.

This 90/90 “overlay” design has delivered strong relative performance since its creation in March 2022. GDE shows how capital efficiency can expand portfolio opportunities without increasing dollar outlay.

It still correlates quite heavily with traditional equities, given equities are half the portfolio and dominate a big chunk of its movement:

Even though it contains 80% more notional exposure to assets, GDE has only about 23% more volatility due to the diversification effect gold has on a stocks portfolio.

GDE also comes with a very reasonable 0.20% expense ratio.

Performance of 100% Stocks vs. 45% Stocks/45% Gold/10% Cash

Let’s look at the performances of these portfolios since 1972.

We’ll look at the unlevered version of GDE (45/45/10). We can then estimate what it would be expected to generate when adding in the 1.8x leverage factor, plus financing costs (embedded in the futures contract).

We can see that the 45/45/10 portfolio did almost as well as the 100% stocks portfolio.

Its worst year was significantly better at -15% instead of -37%. Its maximum drawdown was a bit more than half as high.

Sharpe and Sortino ratios were improved, given the better risk-adjusted returns.

If we add in the leverage of 1.8x and factor in a 3% annual financing cost (0.8x * 3% = 2.4%), we get these figures:

The new end balance isn’t a typo. It’s the difference an extra 5.5%+ annual gets you when compounded over ~54 years.

Note that the max drawdown amount is similar. There’s more volatility, but less tail risk because of the diversification.

This could be improved even further with bonds, as we covered in our article on how to build a futures portfolio.

We have more summary statistics in the Appendix to this article.

Core Equity with a Bond Futures Overlay: The “Leveraged 60/40”

Another popular strategy in the capital-efficiency space is overlaying a traditional equity portfolio with US Treasury futures. 

This effectively creates a leveraged version of the classic 60/40 stock and bond portfolio inside a single ETF.

These ETFs typically allocate about 90% of assets to stocks and then allocates collateral for Treasury futures.

The result is equity-like upside with an added layer of diversification and potential return from bonds.

Note that bond futures don’t give income in the same way that traditional bonds do, so income creation from the bonds generally would involve selling calls (or even selling puts) against the futures contract.

Key ETFs in This Category

• WisdomTree US Efficient Core Fund (NTSX) – Holds 90% in US large-cap stocks and overlays 60% notional exposure to Treasuries. This essentially gives it a 90/60 structure (effectively a levered 60/40).
• WisdomTree International Efficient Core Fund (NTSI) – Applies the same overlay design to developed markets outside the US.
• WisdomTree Emerging Markets Efficient Core Fund (NTSE) – Extends the efficient core strategy into emerging markets with a Treasury futures layer.

Equity with Managed Futures Overlays: Stacking Diversification

Managed futures overlays are another approach to capital efficiency.

These strategies take long and short positions in asset classes such as commodities, currencies, and fixed income. These are more active and often guided by market trend signals. (We covered the managed futures strategy here.)

Because managed futures generally exhibit low correlation to stocks and bonds, they provide important diversification.

This way, traders/investors can maintain their equity allocation while adding a return stream that may perform well during market stress.

Key ETFs in This Category

• Return Stacked US Stocks & Managed Futures ETF (RSST) – Provides 100% US stock exposure alongside 100% managed futures exposure.
• Return Stacked Bonds & Managed Futures ETF (RSBT) – Combines a bond base with managed futures, offering a different flavor of diversification.

Related: Managed Futures ETFs (CTA ETFs)

Equity with Options Overlays: Income and Risk Management

As covered, most capital-efficient ETFs rely on futures, where many apply option overlays to enhance returns or manage downside risk. 

These funds typically hold equities and generate additional income by selling call or put options.

Covered call strategies can provide income from the premiums but may cap upside.

Put-selling strategies can generate income at the cost of taking on downside risk.

Notable ETFs in This Category

• Overlay Shares Large Cap Equity ETF (OVL) – Holds US large-cap stocks and sells put options on the S&P 500 for income.
• WisdomTree Equity Premium Income Fund (WTPI) – Combines equity exposure with a systematic put-writing overlay.
• Innovator Managed Floor ETFs (e.g., RFLR, QFLR, SFLR) – Use put overlays to create a “floor” against losses while maintaining equity exposure.
• Overlay Shares Suite (OVL, OVLH, OVB, etc.) – Use put-spread overlays on equities or bonds to improve returns and generate income.
  

Alternative Commodity Overlay Approaches

Beyond GDE, a few ETFs apply overlays specifically to commodities.

A good example is the Simplify Gold Strategy PLUS Income ETF (YGLD), which offers about 150% notional exposure to gold futures combined with an income-generating options strategy. 

It doesn’t pair gold with equities, but it shows the creative ways overlays can give you more efficient commodity exposure.

Comparison of Leading Capital-Efficient ETFs

Key Considerations for Investors

Capital-efficient ETFs come with added complexity that’s important to fully understand before committing:

• Leverage – Many use leverage via futures, amplifying gains and losses.
• Complexity – Derivatives require understanding of how futures and options function.
• Tracking Error – Performance will naturally diverge from the equity benchmark due to overlays. Be sure to define your strategy before choosing these.
• Costs – Expense ratios are higher than simple index ETFs due to active overlay management.

Expense Ratios of Capital-Efficient ETFs

Conclusion

If your goal is to beat the market through essentially levered beta, the closest ETFs to those at the moment are GDE’s dual exposure model along with the WisdomTree Efficient Core ETFs (NTSX, NTSI, and NTSE).

These pair equities with Treasury futures, using US equities, international equities, and emerging market equities, respectively. 

If you’re more interested in overlay income or risk management, then funds like WTPI, the Innovator Managed Floor ETFs, or the Overlay Shares suite may fit better. 

For commodity-specific capital efficiency, YGLD offers a unique gold-plus-income structure.

Together, these ETFs show how capital-efficient strategies can expand return opportunities while making better use of your capital.

Appendix

Risk and Return Metrics

Summary Table

Here’s a comparison table that puts all the ETFs side by side, showing their overlay type, what they hold, their return style, and expense ratios.