Why Managed Futures?
The term managed futures describes an industry comprised of professional money managers known as commodity trading advisors (CTAs). These trading advisors manage client assets on a discretionary basis using global futures markets as an investment medium. Trading advisors take positions based on expected profit potential.
Managed futures have been used successfully by investment management professionals for more than 30 years. 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.
The benefits of managed futures within a well-balanced portfolio include:
- Potential to lower overall portfolio risk
- Opportunity to enhance overall portfolio returns
- Broad diversification opportunities
- Opportunity to profit in a variety of economic environments
- Limited losses due to a combination of flexibility and discipline
Diversification
Managed futures are investment vehicles that, when blended into a traditional portfolio, can achieve diversification, reduce portfolio volatility, enhance overall return potential, and provide protection during extreme or down equity market cycles. The chart below illustrates an optimal portfolio mix, also known as an "efficient frontier".
Managed Futures in Brief
Managed futures provide an excellent source of diversification and low correlation to most other asset classes.
- This type of diversified portfolio, consisting of non-correlated assets, increases investor potential for greater returns with reduced total portfolio volatility.
- Not only is there a strong case for managed futures in dismal economic periods, but these vehicles also have exhibited relative consistency throughout market cycles (exhibiting absolute return).
- CTAs are able to employ different trading strategies, trade additional markets, and implement separate trading time frames than traditional investments.
- Managed futures, via investments in individually managed accounts, offer enhanced transparency and liquidity over traditional alternative investments.
For more information regarding managed futures or managed accounts please contact your Lakefront Futures representative at 888-748-8122 or by email at managed@lakefrontfutures.com and we will more than happy to discuss this with you.
Download the following managed futures booklets for further information:
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