Managed Futures
Diversification benefits and the modern portfolio theory
Provides global diversification into array of liquid markets
A successful managed futures trading advisor has the flexibility to go long or short with the markets. They can buy futures in anticipation of a rising market or sell futures in anticipation of a falling market, generating greater potential for profit regardless of current market conditions. With the advent of ever improving technologies came increasing access to a host of global futures exchanges which in turn allows managed futures trading advisors to diversify their trading systems by participating in over 150 different markets worldwide.These markets include currencies, stock indices, financials, agricultural products, precious metals, energy products, and more. As a result, managed futures trading advisors have an extraordinary variety of venues and opportunities for profit potential and risk reduction through an array of non-correlated markets.
The table shows the explosive growth in global futures and options volume in selected markets over a one-year time frame in millions of contracts and the percent change in volumes over that short period. Trading volume for the first two months of 2007 rose to 2.13 billion contracts implying that volume for the year will exceed 12 billion contracts.
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Key Benefits of
Managed Futures
- 1. Non-correlation to traditional assets
- 2. Potential for enhanced portfolio returns
- 3. Opportunity for reduced portfolio volatility risk
- 4. Opportunities in both bull and bear markets
- 5. Ability to profit independent of the economic environment
- 6. Can be employed as an inflation or deflation hedge
- 7. Provides global diversification into array of liquid markets
- 8. Managed Futures industry is stable and transparent
- 9. Potential tax benefits managed futures versus stocks