Managed Futures Online

The term - Managed Futures describes an industry made up of professional money managers known as commodity trading advisors (CTA's). Investment management professionals have been using managed futures for more than 20 years now. With practically a zero correlation with stocks, one of the most attractive features of managed futures is its ability to add profound diversification to an overall investment portfolio.

Benefits of a Managed Futures Account within a well-balanced portfolio

Opportunity for reduced portfolio volatility risk
Potential for enhanced portfolio returns
Ability to profit in any economic environment
Opportunity to easily participate in global markets

Studies have shown the benefits of adding managed futures to a diversified portfolio. While the practice of managed futures has been in place for long, it has been only in recent times that institutional investors such as banks, endowments and pension funds, have started investing in managed futures. According to the Chicago Board of Trade, an estimated $45 billion was held for managed futures in 2002.

The global aspects of managed futures allow the investment to be diversified among the potential of over 150 markets worldwide. Additional diversification often comes from the use of multiple trading advisors or trading philosophies within a product, such as a managed futures fund or managed account. This multi-faceted diversification leads to the 4 primary benefits of adding managed futures to a portfolio.

Opportunity for reduced portfolio volatility risk: There is a great opportunity to reduce the portfolio volatility risks. Managed futures have a low and sometimes negative correlation to both stocks and bonds. Diversifying among asset categories with low to negative correlations can create efficient investment portfolios.

Potential for enhanced portfolio returns: Dr. John Lintner of Harvard University wrote, "the combined portfolios of stocks (or stocks and bonds) after including judicious investments in leveraged managed futures accounts show substantially less risk at every possible level of expected return than portfolios of stocks (or stocks and bonds) alone."

Ability to profit in any economic environment: Managed futures trading advisors have the ability to either sell or buy futures in anticipation of market movements. It is possible to take advantage of fluctuations in inflation by buying or selling hard commodities such as gold, silver or oil, among others.

Opportunity to easily participate in global markets: Not only are trading advisors able to participate in global commodity markets, but futures provide an entry into global stock indexes and financial instruments as well.

Thanks for visiting. News updated daily at Times Of The Internet Please visit the PerformanceCorporate Directory. Member of the Blog Republic.