Information Courtesy of CME Group from their publication: Managed Futures: Portfolio Diversification Opportunities
According to the CME Group, “Managed futures have been used successfully by investment management professionals for more than 30 years. Institutional investors looking to maximize portfolio exposure continue to increase their use of managed futures as an integral component of a well diversified portfolio. With the ability to go both long and short, managed futures are highly flexible financial instruments with the potential to profit from rising and falling markets. Moreover, managed future funds have virtually no correlation to traditional asset classes, enabling them to enhance returns as well as lower overall volatility.
Recent growth in managed futures has been substantial. In 2000, it was estimated that there was $37.90 billion was under management by managed futures trading advisors. By the end of second quarter of 2010, that number had grown to more than $223 billion. According to Barclay Hedge, one of the oldest and most respected providers of alternative investment data, out of the total $1.78 trillion invested in alternative investment strategies Managed futures is now #1 surpassing all other investment strategies based on assets under management.Why are managed futures so popular with investors? According to Sol Waksman, founder and President of BarclayHedge the current growth in managed futures assets has been more closely aligned with changing sentiment among sophisticated investors, who are now seeking transparency, liquidity and lower downside volatility within their portfolios all of which managed futures can potentially provide.
Please be advised that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. An investor must read and understand the current disclosure document before investing. Past performance is not necessarily indicative of future results.
US Stock / International Stock / Managed Futures Comparison 1/1980 – 9/2010
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
The above chart compares Managed Futures represented by the CISDM EW CTA Index1, US Stocks represented the S&P 500 TR2, and International Stocks represented by the MSCI EAFE3. A similar chart was issued by the CME in September 2008. Since that time, September 2008, the S&P 500 TR was down over 11%, the MSCI EAFE was down over 23%, and the CISDM EW CTA Index was up more than 18%.
1The CISDM CTA EW Index reflects the average return for CTAs reporting to CISDM database. In order to be included in a CISDM CTA Index, a CTA must have at least $500,000 under management and at least a 12- month track record. 2The S&P 500 TR Index is comprised of the S&P 500 Price Index adjusted for monthly dividends from January 1980 through November 2000 and the S&P 500 Total Return from December 2000. 3The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of 22 major developed markets in excluding the US & Canada.
