Managed futures has been around at least since the 1980s, but interest and assets in the space didn’t truly take off until investors saw the outsized gains managers produced during the 2008 financial crisis – double digit gains while the stock market is in freefall is definitely attention-grabbing (Disclaimer: past performance is not necessarily indicative of future results). Unfortunately, that surge in interest came after the crisis gains had been achieved. And now that we’ve experienced a few middling years while stocks have bounced back to new highs, there are signs that interest is waning.
The Hedge Fund Spotlight from Preqin Group has a new report that includes some illuminating facts on the state of managed futures after the less-than-stellar 2009-2013 period. Despite our perpetual complaint that CTAs are grouped in with hedge funds, there are still some very interesting bits of information about managed futures in the report. A few takeaways:
- The performance of CTAs and managed futures managers was marginally positive in the first quarter. An array of commodities’ prices, notably in the metals sector, declined during the first three months of 2013 and major currencies weakened against the US dollar. A gain of 1.40%, the highest for six months, in January was all but given away the following month and CTAs ended Q1 up 0.21%.
- CTA launches in 2012 were at their lowest since 2006, and from the slow start in 2013 it appears it could be another year where CTA launches are overshadowed by hedge funds pursuing other strategies.
- Following the poor performance of CTAs in 2011 and 2012, and a slow start to 2013 in terms of returns generated, investor appetite for CTAs is showing signs of decreasing. Investor searches initiated for the strategy fell again to 17% of all searches gathered by Preqin analysts in Q1 2013, down from 18% in Q4 2012 and 25% in Q2 2012.
Just as predictably as investors rushing in after the crisis, we’re now seeing a bit of a drop-off in interest as investors start asking themselves why they’re diversified when stocks look so great (a question we broke down in a recent newsletter). It’s the flip side of chasing performance: fleeing weakness. And the unfortunate pattern would be completed if we entered another crisis phase, with stocks tumbling and managed futures shining after investors have turned elsewhere.
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.