Managed Futures
Diversification benefits and the modern portfolio theory
Structure of Managed Futures
There are several types of industry participants in the managed futures sector.Commodity Trading Advisors (CTAs) are responsible for the actual trading decisions and activity of a managed futures account.
Commodity Pool Operators (CPOs) assemble public funds or private pools, usually in the form of limited partnerships, and select the trading advisors.
Futures Commission Merchants (FCMs) are the brokerage firms that execute and clear CTA-directed trades on various exchanges.
Managed futures advisors and investors benefit from the structural efficiencies of the futures markets. Notable efficiencies include:
- 1. Deep liquidity
- 2. Use of leverage
- 3. Lower transaction costs
- 4. Liquidity/rapid execution
- 5. Opportunity in rising, falling, or trend-less markets, and
- 6. Value capture in the market
back to home -->
Learn More about Managed Futures
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