What Are Managed Futures?
The term managed futures refers to a 30 plus year-old industry made up of professional money/account managers who are known as “commodity trading advisors” (CTAs). CTAs are required to be registered with the U.S. government’s Commodity Futures Trading Commission (CFTC) before they can offer themselves to the public as money managers.
Where do Managed Futures fit in the investment universe?
Using the simplified diagram above as a guide, managed futures are a subset of the Alternative Investment asset class. While you should always consider the advice of your personal financial planner, conventional wisdom supports the idea of having multiple asset classes represented in your investment portfolio. Typically, alternative investments, and managed futures especially, perform with low or even negative correlation to traditional investments like equities and fixed income securities. Additionally, they may have little to no correlation with other counterparts in the alternative investment space like real estate or even commodities themselves. For this reason, they have the potential to reduce the overall investment risk of your portfolio.
Who invests in Managed Futures?
Managed Futures investments are used by investors of all types: from individuals to large institutions. CTA Programs come in all shapes and sizes using various markets and methods to accomplish their strategy. The minimum investment requirement is dictated by the CTA, but can be quite low. Some CTAs will accept as little as $10,000 to begin.
Additionally, investors may use different ownership structures if they find it beneficial. Accounts owned by entities like an LLC or Corporation are frequently used. You can even use qualified money held in an IRA. View our CTA Database of trading programs and talk with an investment specialist about which programs are the best fit for your portfolio.
What are the potential benefits?
In short, managed futures have the potential to perform independently of your traditional stock and bond investments. Factors that cause the stocks and bonds to perform better or worse may or may not have any effect on your managed futures investment. Put another way, managed futures investments don’t require a positive economic environment to perform well.
Click on the link to read more about the potential benefits of Portfolio Diversification with managed futures.
How do I decide if they are right for me?
We believe managed futures are an excellent investment opportunity, but it’s not for everyone. There are a number of considerations before investing, so we strongly encourage you to get to know an investment specialist. We work with individuals and institutions to help them understand managed futures and find the right solution. We don’t charge for our information or expertise. Give us a call, or fill out our contact form, and we will email you at your convenience! We will guide you through the process in a no-hassle way.
Contact Us today to talk about your investment options.
Foremost Capital provides data for hundreds of Commodity Trading Advisors in our database.