PFGBest Update: Wolf in Sheep’s Clothing?
Remember last week, when we talked about the sweep of margin out of an FCM and into a more traditional account as a means of protection? And how the legalities of the situation may well complicate the situation? Well, it looks like an unlikely player may just be stepping up to the plate and dancing around the legal concerns.
Looking Through the “Mirage” to Managed Futures
While we missed it when it came out, a book called The Hedge Fund Mirage:The Illusion of Big Money and Why It’s Too Good to Be True, by Simon Lack, has been stirring up discussion and argument around hedge funds. This got us thinking… do his arguments apply to managed futures, too? We tackled the issues one by one to get to the conclusion.
PFGBest Update: How far did the apple fall from the tree?
Since the PFGBest scandal broke, investors have been calling for heads on a platter. They have wanted Wasendorf Sr. arrested (done), the NFA disbanded/sued/held liable (not yet), and pray for US Bank and their deep pockets to have some liability so they pay out investors (fingers crossed). Underneath all of that, however, has been the question of just how much others at PFGBest (and especially Wasendorf’s son – Russ Wasendorf Jr.) knew about the fraud. Well, we may have a chance to find out.
Weekend Reads
The Olympics may still be in the spotlight, but behind the scenes, trouble is a-brewing’. The ongoing Libor scandal was bad enough, but when the New York State Department of Financial Services goes over the heads of the highest regulators in the land, you better believe heads are rolling. Combine these developments with the continued PFGBest scandal, additional Federal Reserve rumblings on QE3, the never-ending upward-bound and totally irrational trajectory of stocks, plus a ramp up in U.S. political warfare, and you’ve got the scene set for quite a lot of drama. As we head into the weekend, hoping that the break to cooler weather in Chicago will signal a break to more sane developments next week, here’s what we’re reading.
PFGBest Update: Give Us Some Options, Already
We’re starting to feel like the perpetual bearers of bad news. The narrative in the post-PFGBest futures world has focused on how to protect clients moving forward. All options are being considered- industry wide insurance, new penalties for misdeeds, and so forth. One of the options we looked into was the idea of having a separate, SIPC or FDIC account set up to hold client funds, with margin being swept to and from the clearing firm on a daily basis. But as was discussed at the CFTC roundtable, that’s not even an option.
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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