Benefits of Managed Futures

The term managed futures describes an industry made up of professional money managers known as commodity trading advisors (CTAs). These trading advisors manage client assets on a discretionary basis using global futures markets as an investment medium. Trading advisors implement their systems to take positions based on expected profit potential in both rising and falling markets.

Futures markets number over 150 worldwide

Commodity Futures

Commodity futures are not traditional asset classes. A futures contract is a binding agreement to buy or sell a commodity or financial instrument sometime in the future at a price agreed upon at the time of the trade. While actual physical delivery seldom takes place, these contracts are nevertheless standardized and their trading is regulated. Price is the variable that is of the greatest concern to speculators.

Managed Futures Investments

Managed futures, a sub-component of the alternatives asset class, is increasingly being recognized as an important investment alternative that may potentially enhance the returns and lower the overall volatility of a diversified investment portfolio.

Managed futures investments have been used by individual investors for more than 30 years. More recently, institutional investors such as pension funds, foundations, endowments, trusts and family offices have incorporated managed futures as one segment of a well-diversified portfolio.

Growth of Managed Futures Assets

Money Under Management during the 1st quarter 2008 was $219.7 bil., a 6.34% increase from the previous quarter. This represents a 27.73% increase in assets over the past 12 months.

(January 1981 - March 2008)

Why Managed Futures?

Today, a variety of academic research and evidence demonstrates the potential benefit of incorporating managed futures to create better balance to a stock and bond portfolio. Although futures investments involve substantial risk and are not suitable for everyone, the general conclusion is that diversification of non-correlated asset classes, such as the introduction of managed futures to an investment portfolio, can both reduce portfolio risk and enhance overall portfolio performance.

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