An Overview of the
The term "futures" may sound mysterious, but quite simply a futures contract is a standardized, transferable agreement between two parties to make or take delivery of a specified quantity of a commodity, at a specified time and a specified place.
Over the last 150 years, the need for businesses to transfer negatively impacting price risks has grown dramatically. Now under the federal jurisdiction of the CFTC and its self-regulatory agency, the NFA, the futures markets continue to be responsive to these price-risk management needs. The managed futures industry has existed for more than 30 years, and in 2008 managed more than $206 billion in assets. More than $2 trillion in currency volume is transacted globally each day. In addition, each day there is more dollar volume traded in U.S. Treasury bonds on the Chicago Board of Trade than is traded in the entire daily volume of stocks on the New York Stock Exchange.
As consumer demand for a wider range of products increases, and international trade expands, the need for new futures contracts grows. Today, investors can participate in more than 300 contracts, including foreign currencies, oil and gas, and financial instruments such as treasury bonds, Euro dollars, and Stock Index Futures. The commodities futures markets, when traded by seasoned professionals, have a high probability of being a very efficient and effective means of safeguarding values in traditional investments against their downside vulnerability.
The commodities futures markets also offer a much broader field of opportunity for investors than conventional stock and bond markets, because of the enormous diversity in commodities traded, from agricultural products to minerals to fuel to financial instruments to currency. As late as 1980, agricultural commodities comprised more than 60% of the futures trading volume. Today, approximately 11% of futures trading is in agriculture. More than 80% of the volume traded on the world's futures exchanges is financial in nature. The other 19% involves other products such as energy contracts. Agriculture has not diminished in volume. The other commodities have simply increased, thereby diminishing agriculture's percentage of overall volume traded. This is an indication of the inherent strength of futures markets overall. The commodity futures markets, however, are too vast for an individual investor to master more than a small segment of trading; this is why managed futures are so essential to success as an investor in this arena.
What are Managed Futures?
The term "managed futures" describes a managed approach to futures
market participation. It signifies an industry comprised of experienced, professional
money managers, or CTAs, who manage investor assets in the futures, forward
and inter-bank currency markets. These wealth managers specialize in various
commodities, which enables them to make expert investment decisions across
a focused range of markets. These disciplined investment decisions are based
on market-tested strategies. Risk reduction and conservative portfolio
management techniques are strictly maintained.
From this broad group, Mega Capital selects the most elite of CTAs and invests in their portfolios, in order to maximize the impact of the best and the brightest on your returns.