Sign inA Primer on Managed Futures - Part 1
Many investors search for alternative investment opportunities in order to improve the returns on their portfolios. For many, "managed futures" are just the ticket to energize their portfolio. However, helpful educational material on this important alternative investment is wanting. This is the reason we have created this and other documentation on the subject of managed futures. In this document, in particular, we provide information that will get you started asking the right questions. As you read through this, some of the material might seem "over your head." It probably is, but as you go through all of the material, and as you do your homework (look up terms you do not understand is one assignment), clarity about managed futures will come your way.
Managed Futures
The term "managed futures" refers to a 30-year-old industry made up of professional money managers who are known as "commodity trading advisors" (CTAs). CTAs are required to register with the U.S. government's Commodity Futures Trading Commission (CFTC) before they can offer themselves to the public as money managers. CTAs are also required to go through an FBI, deep-background check, provide rigorous disclosure documents (independent audits of financial statements every year), which are reviewed by the National Futures Association (NFA), and go through specific training for accreditation.
CTAs generally manage their clients' assets using a proprietary trading system, or a discretionary method that may involve going long or short in futures contracts in areas such as metals (gold, silver), grains (soybeans, corn, wheat), equity indexes (S&P futures, Dow futures, NASDAQ 100 futures), soft commodities (cotton, cocoa, coffee, sugar) as well as foreign currency, and U.S government-bond futures. In the past several years, money invested in managed futures has more increased and is estimated to continue to grow in the coming years if hedge fund returns flatten and stocks underperform.
