|
Trader's Tip
Quotes & Charts
Quote Search:
Market Specific Links:
Indices/Minis
Grains
Currencies/Forex
Financials
Food/Fiber/Softs
Metals
Energy
Meats
|
Special Message from Our Author
Today's Featured Article
Successful investors manage risk intelligently by participating in the global markets and diversifying across differing asset classes such as stocks, bonds, real estate and global commodity markets.
For the individual investor, Managed Futures provide an easy and direct avenue for investors to potentially increase their returns and implement a global diversification strategy for their investment portfolios.
Managed Futures is an industry in which professional money managers direct investments in global currency, interest rate, equity, energy and agricultural markets. They do this through the use of futures, forwards and options.
If you cannot view the Average Annual Returns chart, go here.
Managed Futures are operated by licensed Commodity Trading Advisors, or CTAs,
who are regulated in the United States by the Commodity Futures Trading Commission
and the National Futures Association or NFA. |
|
A growing investment opportunity
With a twenty-year history among individual investors, Managed Futures assets under management have recently climbed from US$170 billion in 2006 to over US$225 billion in 2008.
If you cannot view the Growth in Managed Futures chart,
go here.
Why Managed Futures?
Perhaps the chief attraction for many investors is that they provide returns patterns that are uniquely different from traditional stock and bonds.
In fact, Managed Futures have zero correlation with the S&P 500 index, only 0.05
correlation with U.S. bonds and 0.16 with world bonds. With compound annual returns
on average of 13.58% and a solid risk-to-reward Sharpe ratio of 0.44, Managed
Futures are attractive both as a stand-alone investment and as a portfolio diversifier. |
|
How does investing in Managed Futures work?
Prospective investors can invest in Managed Futures in a variety of account types: from trading / discretionary accounts to Roth and Traditional IRAs and 401(k) accounts; pension funds; or trust funds.
Investors should seek an advisor who can help assess their risk tolerance, trading goals and corresponding capital requirements.
The role of the Managed Futures Advisor is to advise investors on a suitable investment program by a Commodity Trading Advisor and to monitor the client's investment per their investment parameters.
Once an investor has decided to commit capital, he or she fills out a power of attorney with the CTA and then opens a segregated account. They will then receive electronic reports or online access to daily account activity, gains, losses, open positions, and balances such as current account value.
Are Managed Futures right for you?
Managed Futures are not suitable for every investor, but an experienced futures trading advisor can help investors evaluate whether Managed Futures can help them meet their personalized goals. | |
About the Author
|
Michael O'Phelan has 20 years experience in the capital markets as a hedge fund manager, marketer and product developer with Kilimanjaro Asset Management, Moody's KMV, Bloomberg and others.
| |
Special Message from Our Author
|
