The Key Benefits of
The primary reason to make any investment is to add value to your principal assets. An important objective for investing in managed futures is to increase a portfolio's diversification, and thus increase its range of opportunities for profit while reducing the risk of loss.
The Power of Diversification
An overwhelming majority of investors hold portfolios made up entirely of bonds, equities, and cash and think of themselves as adequately diversified. In fact, traditional investments are closely correlated and tend to be profitable only in bull markets. One of the central principles of the Modern Portfolio Theory, as developed by the Nobel Prize economist Dr. Harry M. Markowitz, is that more efficient investment portfolios can be created by diversifying among asset categories with low to negative correlations. Correlation refers to the performance relationship of different investments relative to each other. Historically, managed futures have had a low correlation to both stocks and bonds. Because managed futures investments are non-correlated with traditional investments, managed futures are most appropriately incorporated within a diversified, long-term investment strategy. This offers an opportunity to participate in whatever markets happen to be realizing the best performance, while possibly reducing the risk of big losses you might have suffered if all your money were in a single investment that did poorly. In short, managed futures offer an opportunity to spread risk through diversification, and potentially increase returns.
The Key to Safety
Managed futures investments have consistently demonstrated the ability to perform independently of conventional markets such as stocks and bonds. This ability is referred to as non-correlation, or the potential for managed futures to perform well when other markets such as stocks and bonds are losing ground.
|Past performance is not indicative of future returns.|
Dynamic Returns in Global Markets
Managed futures trading advisors can buy futures positions in anticipation of a rising market or sell futures positions if they anticipate a falling market. Therefore, if positioned correctly, profit potential can be achieved in both bull and bear markets. In economic conditions normally having a negative impact on other portfolio assets, investors in managed futures have an opportunity for profit. Trading advisors may also attempt to use strategies employing options on futures contracts that could allow for profit potential in neutral or flat markets. Because futures markets are extremely liquid and trades are settled immediately, wealth managers are able to respond swiftly when major price movements in the markets occur and may be able to do so without liquidating other investments.
Access to Major Economic Markets
Singapore, Frankfurt, Tokyo, Paris, New York, Chicago, Hong Kong, London: these are some of the more than 50 major international markets that trade more than 300 types of futures contracts around the world. Managed futures CTAs are able to diversify not only by product but also by geography, effectively expanding the scope of investment opportunities. CTAs are then able to increase portfolio exposure among a broad array of non-correlated markets in international investments and non-financial sectors, thereby accessing greater profit potential as well as enhanced risk reduction.
Why a Professionally Managed Approach Works
|An Individual Trader||Factor||A Professinal Manager|
|Subject to Emotion||Discipline||Objective, Adheres to Strict Policies and Techniques|
|Limited Resources to Devote to Research||Research||Superior Resources to Devote to Research|
|Little Risk Control, Limited Ability to Monitor Markets||Risk Control||Full-Time Commitment to Risk Control|
Long-Term Capital Appreciation Potential
Historically, the short-term performance and rates of return for managed futures investments have varied dramatically due to the nature of the markets traded and the fact that managed futures are aggressive-growth vehicles. Investors should be informed and educated about the variability of short-term futures investment performance, but they should also be aware of managed futures' performance potential when viewed within the context of a long-term investment horizon.
When you invest in managed futures you are investing in the pipelines
of the real monies of the world: gold, petroleum products, agriculture, currencies,
and foreign food stuff."