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The term managed futures describes an industry comprised 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 take positions based on expected profit potential.
Managed futures have been used successfully by investment management professionals such as CTAs for more than 30 years. Institutional investors looking to maximize portfolio exposure continue to increase
their use of managed futures as an integral component of a well diversified portfolio. With the ability to go
both long and short, managed futures are highly flexible financial instruments with the potential to profit
from rising and falling markets. Moreover, managed future funds have virtually no correlation to traditional
asset classes, enabling
them to enhance returns as well as lower overall volatility. Recent growth in managed futures has been substantial. In 2002, it was estimated that more than $45 billion was under management by managed futures trading advisors. By the 3rd Qtr of 2008, that number had grown to more than $220 billion.
In the last 10 years, assets under management for the managed futures industry have grown an unprecedented 700%.
By their very nature, managed futures provide a diversified investment opportunity. Trading advisors can participate in more than 150 global markets; from grains and gold to currencies and stock indices. Many
funds further diversify by using several trading advisors with different trading approaches.
The benefits of managed futures within a well-balanced portfolio include:
1. Potential to lower overall portfolio risk
2. Opportunity to enhance overall portfolio returns
3. Broad diversification opportunities
4. Opportunity to profit in a variety of economic environments
5. Limited losses due to a combination of flexibility and discipline
Source: Barclay Hedge Alternative Investment Database (Time period 1980 through 3rd Quarter 2008)
Managed futures are one of the fastest growing investments today. As one can see from the chart, it
took 20 years for managed futures to reach $37.90 billion under management. In the next eight years
alone, managed futures experienced an increase in assets 600% higher than that experienced in the
prior twenty year period. |
Past performance is not indicative of future results. The risk of loss in futures trading is substantial.
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Free Information Packets
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