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Managed Futures are Considered an Alternative Investment to Stocks and Bond
Alternative investments represent an asset class that has the potential to provide returns that are uncorrelated to the stock and bond market. When added to a traditional portfolio of stocks and bonds, alternative investments can potentially increase returns while reducing risk of the overall portfolio.
Managed futures are an alternative investment vehicle which offers the investor access to the futures and options markets through a professional money manager. Investing in managed futures are attractive, because managed futures offer the investor advantages such as liquidity, lack of counter party risk, market transparency, and access to such diverse markets as natural resources, raw materials, and financial instruments.
Professional Money Managers, known as CTAs, Control Managed Futures Accounts
Managed Futures accounts are controlled by professional money managers known as Commodity Trading Advisors (CTAs). A managed futures account, is like any other brokerage account established to trade in futures, except that the responsibility for determining what trades to make, and at what time, is delegated to the CTA. In the United States, CTAs trading futures are members of the National Futures Association (NFA) and are registered with the Commodity Futures Trading Commission (CFTC).
Growth of Managed Futures
The managed futures industry, historically, had been enjoying steady growth. Then in 2003, when the investment community realized the many advantages offered by managed futures, the industry exponentially grew. The chart below shows that money under management had nearly doubled from 2003 to 2006, rising from 86 billion to 156 billion.
Who Invests in Managed Futures?
Many different sectors of investors have utilized managed futures to expand and diversify their portfolio, or also to invest in as a stand alone investment. As the growth of the managed futures industry has indicated, institutional investors, such as pension plans, as well as individual investors, strive to include managed futures in their asset mix. If you are already trading futures, you may benefit from incorporating managed futures into your trading program because managed futures can further diversify your portfolio.
If you are new to futures trading, managed futures may offer you a way to take advantage of the opportunities offered by the futures markets, and the opportunity for diversification.
What We Offer
