Hedge Fund Advertising – Managed Futures Style
It’s been one week since the SEC made an unprecedented decision to strip the multi-decade old ban on general solicitation by hedge funds, and the potential implications are endless. While we often stand up and tell anyone who will listen that managed futures are not hedge funds… in this case – the privately offered funds of managed futures programs are surely part of ”hedge fund advertising’. So what does this landmark ruling by the Securities folks mean for the commodity pools/managed futures funds sort of caught in between securities and futures regulations:
Futures Industry Sausage Making
It’s been a hell of a day on Twitter for managed futures followers, as the Senate held hearings the CFTC re-authorization. CME Executive Chairman Terry Duffy came out against proposed customer protection rule which has become known as the ‘residual interest’ rule. FCM’s would have 5 days to get the necessary margin amount from a customer on margin call.
1st at Morningstar = 144th in the Real World
361 Capital’s Managed Futures mutual fund has been named the best performing fund over the past 12 months, according to Morningstar, but we can’t help but think this is a little like being the cleanest dirty shirt. We couldn’t help but wonder where their 8.12% return over those 12 months would rank amongst the 784 programs in our database and against our recommended list. Hint, 361 isn’t #1.
What’s your Futures Market Marked to?
What do you get when three banks are fined over $2 billion for rigging the Libor rate to make money on derivatives? The British government practically gives it away to The NYSE for the cost of a small cup of coffee. Now, futures exchange ICE will own NYSE Euronext later this year in a $10 Billion deal, and here’s where thing get interesting. You see, ICE is a direct competitor with the CME in interest rate futures tied to Libor, and the CME just happens to have their biggest product (Eurodollar futures) benchmarked to LIBOR.
Midyear Asset Class Scoreboard
June was not a pretty month to be an investor – no matter the asset class, with all of the asset classes we track seeing losses for the month. At the half way point of the year, however; most asset classes remain positive for the year. Managed Futures put in best First Half since 2010, but still trail most other asset classes YTD.
Disclaimers
Managed futures, commodity trading, forex trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. You should not rely on any of the information as a substitute for the exercise of your own skill and judgment in making such a decision on the appropriateness of such investments.
The entries on this blog are intended to further subscribers understanding, education, and – at times – enjoyment of the world of alternative investments. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author.
The mention of specific asset class performance (i.e. +3.2%, -4.6%) is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.), and investors should take care to understand that any 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.
The performance data for various Commodity Trading Advisor (“CTA”) and Commodity Pools are compiled from various sources, including Barclay Hedge, 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.
The mention of general asset class performance (i.e. managed futures did well, stocks were down, bonds were up) is based on RCM’s direct experience in those asset classes, estimates of performance of dozens of CTAs followed by RCM, and averaging of various indices designed to track said asset classes.
The mention of market based performance (i.e. Corn was up 5% today) reflects all available information as of the time and date of the publication.
The owner of this blog, RCM Alternatives, may receive various forms of compensation from certain investment managers highlighted and/or mentioned within the blog, including but not limited to retaining: a portion of trade commissions, a portion of the fees charged to investors by the investment managers, a portion of the fees for operating a fund for the investment managers via affiliate Attain Portfolio Advisors, or via direct payment for marketing services.
Managed Futures Disclaimer:
Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.
See the full terms of use and risk disclaimer here.
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