How Good is Your Futures Manager at Cash Management…

 

Take the Cash Management Survey Today

We’ve talked before about how the minimums in the managed futures space are made up of a few different things. One, the actual amount needed in the account to cover the cash requirement for trades (usually about 10% to 15% of the minimum). Two, a cushion amount needed to absorb a losing streak or drawdown period (about 15% to 25%). And three, an arbitrary amount used to make the percentage returns more appealing to investors (the remaining 60% to 75%).

From a managed account perspective, this means an investor can utilize notional funding to have $250K traded as $500k, for example – allowing the individual investor the ability to manage the additional cash on their own terms and in the way they want to.

But things are a little different when we’re talking about commodity pools and managed futures funds. In that case, the full amount of the minimum investment is turned over to the manager, meaning the manager of the fund has to decide what to do with 50% or more of the capital which isn’t being deployed directly by the strategy.

That’s where things get a little interesting. You see, in the past, most fund managers simply parked the excess cash in interest earning T-Bills in the futures trading account. But with T-Bills earning close to zero for several years now, many managers have branched out looking for other sources of yield for that idle cash. We’re talking money markets, agency debt, corporate bonds, and the like – which are all decidedly not the type of markets managed futures specialists are used to looking at.

How important is this cash management?  92% of managers and investors in a survey last year by London based Autumn Capital Partners said effective cash management is an important part of being a good CTA manager, but only 11% of investors though the CTAs they see have impressive cash management protocols and systems.  You can see the full survey results here.

Which brings us to….

This year’s survey by Autumn Capital. They want even more insight from managers and investors alike, and asked for our help in spreading the word and getting the survey into the hands of CTAs and investors. They are even sweetening the pot, a bit, giving away an iPad mini to a randomly selected survey participant.

Click Here to take the Cash Management Survey Today

 

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, 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.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, 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.

See the full terms of use and risk disclaimer here.