Why do I need Managed Futures in my portfolio?
You don't. So why do people and institutions invest in them?
Managed Futures are simply an alternative asset class which individual, institution, pension funds use to diversify their portfolio holdings. Just like you may own a home, some US stocks, US Bonds and maybe some foreign stocks, managed futures add to portfolio diversification.
What are Commodity Trading Advisors (CTA's)
Commodity Trading Advisors are managed future program managers. Just like a mutual fund has a fund manager, CTA's manage futures investment programs.
Can't I trade futures myself?
Yes. Just like stocks, simply start an account with a brokerage firm which offers futures trading.
Why would I have a Commodity Trading Advisor trade my account when I can do it myself?
The same reason you buy a mutual fund. CTA's are experienced traders who trade futures professionally.
How long have managed futures accounts been around? I've never heard of them.
Managed futures have been around since the 70's. Only in the past 10 years have they become popular with investors looking to diversify out of stock only holdings.
Who invests in managed futures?
High net worth investors, institutions and pension funds.
What classifies an investor as high net worth?
Most commodity trading advisor programs have minimum investment levels typically ranging from $50,000 to $500,000. A high net worth investor usually has at least $400,000 in net liquid assets. Most brokers would suggest not putting more then 25% of ones investment capital into alternative investments such as managed futures.
What types of futures do CTA's trade:
- Money Market
- Foreign Exchange
- Bond Market
- Equity Index Market
- Soft Commodities
Where can I learn more about managed futures investing? Register (it's free) and start reading CTA program details. Download their disclosures documents for detailed program information. We also recommend contacting an experienced broker.