CTAs trade global futures markets, options on futures, and foreign exchange. Historically, CTAs traded only in commodity futures, but now trade futures in every market sector. Using sophisticated investment strategies and the latest technology, CTAs seek to achieve alpha, superior, risk-adjusted returns. CTAs, also known as Managed Futures managers, are regulated by the NFA and CFTC in the United States.
Managed Futures includes multiple investment strategies diversified over styles, timeframes, and market sectors.
Their returns exhibit little to no correlation to stocks, bonds, or other alternative investments.
The exchange-listed futures contracts and currency markets provide real-time price valuation.
Futures and currency forward markets are liquid.
With ease and little cost, traders can go long or short with futures and currencies for potentially profitable trades in rising or declining markets, although past performance is not necessarily indicative of future results.
Managed Futures and equities have historically been non-correlated with each other and often function as good complements during difficult periods for each asset. CTAs have demonstrated a consistent ability to generate profits during extended equity drawdowns.
Historically, Managed Futures has exhibited little to no correlation to the equity and bond markets. Managed Futures may exhibit either a positive or negative correlation. An investment in Managed Futures can, for example, make money when equities make money (the positive correlation). The investment can also make money when equities lose money (the negative correlation). Both the positive and negative correlation can happen while maintaining a near-zero correlation. The following graph shows the dynamic correlation of Managed Futures to equities.
Fully liquid, fully transparent – that's one of the key benefits of investing in Managed Futures. Futures markets are extremely liquid and are traded on global exchanges. The ability to invest and redeem quickly, aiding in actively rebalancing portfolios, also can generate superior returns in a variety of market environments.
"CTA returns have demonstrated substantial long-term diversification properties in the context of a broad, multi-asset class policy portfolio. They also represent one of the few investment strategies that have the potential for outsized positive returns during extended periods of market stress."
– Commonfund (2012)
Data Source: Meisner, James; Kwait, Kristofer; and Delano, John. "Commondfund Hedge Funds. Understanding the Managed Futures Strategy and its Role in an Institutional Policy Portfolio" Commonfund, 2012.
"Managed Futures provides an additional source of uncorrelated absolute return that complements other alternative investment strategies by demonstrating a proclivity for outperformance during periods which tend to be difficult for many other actively managed investments.
"Managed Futures provides institutional investors with a variety of liquid, transparent investment programs that do not exhibit correlations to traditional or alternative investments, and oftentimes, one another."
– Abrams, Ranjan & Flores (2010)
Data Source: Abrams, Ryan; Bhaduri, Ranjan, and Flores , Elizabeth. "Lintner Revisited. A Quantitative Analysis of Managed Futures in an Institutional Portfolio." CME Group, 2009.
"[R]esults suggest that Managed Futures funds offer distinct risk and return characteristics to investors that are not easily replicated through investing in traditional stocks and bonds. Including Managed Futures also improves the risk-return tradeoff of the long-term asset allocation portfolios we consider, thus benefiting long-term investors.
"Our scenario analysis on interest rate environments indicates that Managed Futures exhibits superior performance during periods in which most traditional asset classes underperform. Overall, the results suggest that the Managed Futures funds benefit long-term investors, particularly in rising interest rate environments."
– Ibbotson (2006)
Data Source: Chen, Peng; Zhu, Kevin; Armstrong, Chris "Managed Futures and Asset Allocation." Ibbotson. August 2006
"[A]llocating to Managed Futures allows investors to achieve a very substantial degree of overall risk reduction at limited costs. …Managed Futures appear to be more effective diversifiers than hedge funds."
– Harry Kat (2002)
Data Source: Kat, Harry M. "Managed Futures and Hedge Funds: A Match Made in Heaven." Alternative Investment Research Centre Working Paper Series. London, United Kingdom: Alternative Investment Research Centre, November 2002.
"... the combined portfolios including [Managed Futures] investments will provide a higher return for any given acceptable level of risk ..."
Data Source: Lintner, John. "The Potential Role of Managed Commodity-Financial Futures Accounts (and/or Funds) in Portfolios of Stocks and Bonds." Annual Conference of the Financial Analysts Federation, May 1983.
"[T]he inclusion of Managed Futures both improved the bottom-line profit and lowered volatility.... Managed Futures protect against high inflation (and deflation). I am familiar with no easily liquidated investment other than Managed Futures which, while generating positive rewards over time, lowers the volatility of more traditional investments to any significant degree."
– Almer Orr (1987)
Data Source: Orr, Almer H. III. "John Lintner and the Theory of Portfolio Management." Sixth Annual Managed Account Reports Conference, February, 1985 (Revised February, 1987).
Information on this website is intended for use only by persons and entities that are "Qualified Eligible Persons" as defined in the Commodity Futures Trading Commision Regulation 4.7. Past results are not necessarily indicative of future results. Futures and options trading is extremely speculative and highly risky and is not suitable for all investors. There can be no assurance that an account or fund will earn any profits at all or will be able to avoid incurring substantial losses, including the entire loss of the investment.
This website is for informational purposes only and is not an offer to sell; a salutation of an offer to buy or a recommendation to buy any security. An investment is offered only on the basis of the appropriate Private Placement Memorandum and other offering documentation and in accordance with all applicable laws. This website does not describe all the various risks associated with investing in managed futures or foreign currency exchange, a list of which is in our fund offering documents and our completed due diligence questionnaires. We can provide these documents, or the list, to you upon request.
Pursuant to an exemption from the Commodities Futures Trading Commission in connection with accounts of qualified eligible persons, this document is not required to be, and has not been, filed with the commission. The Commodities Futures Trading Commission does not pass upon the merits of participating in a trading program or upon the adequacy or accuracy of commodity futures trading advisor disclosure. Consequently, the Commodities Futures Trading Commission has not reviewed or approved this trading program or any of the information on this website. Nothing contained in this website constitutes investment, legal or tax advice.
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