What Are Managed Futures?

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.

Notable Quotes

"Managed futures are not any more risky than traditional equity investments. Investment in a single commodity trading advisor is shown to have risks and returns, which are similar to investment in a single equity. Moreover, a portfolio of commodity trading advisors is shown to have risks and returns which are similar to traditional investments." - Thomas Schneeweis, Professor of Finance at the University of Massachusetts, 2002 Academic Study "Benefits of Managed Futures"

"Portfolios... 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." - Dr. John K. Lintner, Harvard Economist

"Portfolios with as much as 20% of assets in managed futures yielded up to 50% more than a portfolio of stocks and bonds alone." - Chicago Mercantile Exchange

"It is a total myth. Now that we had a bear market the mutual fund industry had done worse than [managed] futures ever did...now that these lessons are sinking in, I expect alternative investments to get more exposure...People will be better off [invested in alternative strategies]." - George Crapple, Co-Chairman of Millburn Ridgefield, January 2003 Futures Magazine

Managed Futures: Industry Size

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.