Is it time to add managed futures to your holiday shopping list?

Managed Futures are on the up and up and might be something to consider adding to your holiday shopping list of potential investments for 2015.

Managed Futures as a whole gained a lot of attention during 2008 when many of the Commodity Trading Advisor (CTA) indices were able to produce very impressive returns. Since then, Managed Futures have struggled in comparison to the relentless stock market which continues to rally to record highs on top of record highs.  

Investors have become complacent in the sense that they are comparing managed futures to the broad market. No doubt it has lagged the S&P 500  (CME:ESZ14), but don’t you want your alternative investment to show little correlation to the stock market? This is the exact comparison you do not want to make when diversifying your portfolio, alternatives are meant for a small allocation, and something that has the potential to perform in an up, down, or sideways market. Below is a table that lays out the performance of the BTOP 50 CTA vs. the S&P 500 during the 15 worst quarters.


All too often investors forget about these market corrections, and although past performance is not necessarily indicative of future performance, you can see the importance of diversification (quite frankly, I would be concerned if all my investments were tracking the S&P). Patience is starting to pay off for some of those who have kept to their allocations in managed futures with November posting their best month in more than 12 years, and with three of the top CTA indices posting double digit returns for the year. 


So when you are analyzing your portfolio at the end of the year as so many investors do, ask yourself: “Do I have something that has the potential to perform in an up, down, or sideways market?” It does not have to perform every month but it should offer comfort that you do have that extra tool in the tool box; as an investor it is about being proactive, not reactive.

3 Key Notes:

  1. Transparent – You receive your statement daily
  2. No lock up period – Unlike a mutual fund, there are generally no lock up periods
  3. Incentive fee based – CTA’s are incentivized to perform 


Click here for An Introduction to Managed Futures.