The simple fact about managed futures cta
What's a good plan of action then to help balance your portfolio? Forex is by far the most popular but it has the most amount of fraudulent activity. We tend to advise sticking to commodities, futures and options contracts, REITS, hedge funds, and physical goods like wine and antiques. Let's take a deeper look into managed futures funds.
Because futures tend to be uncorrelated with other investments, most investors buy them to round out their portfolios. Stocks and bonds for instance tend to show high correlation meaning they tend to mostly rise and fall together. Futures markets tend to operate complete independent of most other markets. It’s this kind of diversification the investors are generally looking for within their portfolios. High risk and poor diversification are two principles which can never be overstated in finance. It's a playing with fire to have these two strategies.
Risks in futures can have a different set of rules than investors are used to seeing. Risk is somewhat subjective and since futures aren't as widely understood, the perception is that their risk is higher. Most investors deem something they don't understand as more risky than something they do understand. The reality is that the raw data suggests that futures are actually less risky. Regardless of your financial plan, never let general public's perception determine your strategy.
It's interesting to note that the economic growth of futures and the stock market is so strikingly similar that less than 0.01% separate their patterns. Other secondary portfolio options don't even hold a candle. It's why many experts strong advocate these programs for retirement planning.
The stock market draw downs by comparison, that is the percentage change between the highs and lows, it's significantly more volatile. There are a number of quantifiable measures which track these changes. Risk is always to be managed in investing so it's very interested that futures demonstrate lower risk as a whole. Managing risk is entirely possible with commodities and the data clearly supports that assertion. As more and more investors discover that their financial planner is often more of a saleman than a true advisor, their portfolios gear towards an increase in these programs.
For more info pay a visit to what are managed futures.