Managed Futures &

Managed Futures and Diversification
An Overview

The term managed futures describes an industry comprised of professional money managers who manage assets on behalf of their clients. These money managers are also known as Commodity Trading Advisors, or CTAs. Using the global futures markets, they implement their systems to take positions based on expected profit potential. As an asset class, managed futures are increasingly being recognized as an important investment alternative that may potentially enhance the returns and lower the overall volatility of a diversified investment portfolio.

According to the Chicago Board of Trade, in 2002, an estimated $45 billion was under management by trading advisors. Just two years later in a study released by the Barclay Group, money under management during the 4th quarter 2004 had grown to $131.9 billion. Today, in 2007, that total is nearing $180 billion. This exponential rate of growth has continued as asset managers globally begin to recognize the values inherent in incorporating managed futures portfolios into their overall investment portfolios.



By their very nature, managed futures are a diversified investment opportunity encompassing a vast array of commodities. Trading advisors have the ability to invest in over 150 different markets worldwide. Additional diversification benefits are achieved by using multiple trading strategies or advisors that have proven their superior trading techniques over time. Defining these benefits helps to explain how managed futures can be utilized to achieve a variety of investment goals and objecives for portfolio diversification.

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