Managed Futures Mutual Funds September Update
With the books closed on September, it’s time to update our look at so-called managed futures mutual funds, and once again, the results aren’t pretty (for the mutual funds). We don’t think mutual funds are the best vehicle to access the managed futures asset class if you have the capital to stand on your own and invest in individually managed accounts, and the numbers continue to back us up.
Managed Futures: $300 Billion and Counting
Managed futures has come a long way from the days when it was a largely unheard-of corner of the managed money industry. While hedge funds used to dominate the field, the latest asset flow statistics indicate that investors focused on reducing their tail risk are increasingly turning to CTAs.
Groupon, Zynga, and the Death Spiral
Two of the biggest tech-IPO flops in recent memory – Zynga and Groupon – have endured declines of -80% or more in less than seven months. As usual, seeing this got us wondering – how frequent are such death spirals in the world of managed futures?
Cream of the Crop- Managed Futures Style
Athletes aspire to a national championship or an Olympic gold medal, scientists aspire to a Nobel Prize, journalists aspire to a Pulitzer… these fields have a clear way to recognize those at the pinnacle. But what’s the equivalent for CTAs?
Diminishing Market Diversification Resulting in Diminishing Returns?
In managed futures, people like to tout exposure to commodities. Now, at least one firm is betting that excluding all commodities could be the recipe for success. We’re not so sure that recipe is the solution it’s cracked up to be.
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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