During the last two decades, as managed futures have attempted to move from a niche investment product to a mainstream one, the space has changed — and not necessarily for the better. Aided by a distribution and sales network that rewarded low volatility and convergent strategies, managed futures has been pushed to justify its inherent volatility that is more due to its divergent nature than underlying risk.
Critics might argue that performance over recent years reveals the least compelling aspects of managed futures, but the critics always seem to forget that upwards of 70% to 100% of investors’ allocations are already in traditional investments.
The $298 billion California plan, known as Calpers, said Sept. 15 that it would eliminate its $4 billion allocation to hedge funds. The Sacramento-based fund said the investment vehicles were too complex, costly and small to affect performance. It began the strategy in 2002.