From the March 2014 issue of Futures Magazine • Subscribe!

Preparing to invest in managed futures

Many investors choose managed futures to reduce volatility in their holdings. Managed futures are non-correlated to stocks and bonds and numerous studies have shown an allocation of 10% to 20% to managed futures tends to reduce overall portfolio volatility and improve returns (see “Optimum portfolio mix,” below). This is something that should catch the attention of almost every investor with current exposure to traditional markets. With tapering under way and the changing stock market dynamics, managed futures are becoming more relevant. Unlike other asset classes, including stocks, where profits only can be made in rising markets, managed futures programs can generate profits in both falling and rising market environments through taking long and short positions (see “A diverse lot,” below). Strategies truly can be neutral, bearish or bullish. 

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