The Benefits of Managed Futures

Modern Portfolio Theory allows investors to estimate both the expected risk and returns, as measured statistically, for their investment portfolios. A portfolio's risk can be reduced and the expected rate of return increased, when assets with dissimilar price movements are combined. Diversification reduces risk only when assets are combined whose prices move inversely, or at different times, in relation to each other.

While the technical underpinnings of the Modern Portfolio Theory are complex, its conclusion is simple and easy to understand: A diversified portfolio, of uncorrelated asset classes, can provide the highest return with the least amount of volatility.

One of the most uncorrelated and independent investments as compared with stocks and bonds is professionally 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 alone"
Dr. John Lintner, Harvard University

The term managed futures represents an industry comprised of professional money managers known as commodity trading advisors (CTAs) who manage client assets on a discretionary basis, using global futures and options markets as an investment medium.

Managed futures, by their very nature, are a diversified investment opportunity and they provide direct exposure to international financial and non-finanancial asset sectors. Trading advisors have the ability to trade in over 150 different markets worldwide.

The benefits of managed futures within a well balanced portfolio include:
- opportunity to reduce portfolio volatility risk
- potential for enhanced portfolio returns
- ability to profit in any economic environment
- ease of global diversification