A PSA for CTAs- Do it Right From Day One
We ran into a CTA recently who had a nice-looking track record, and we were excited about where the conversation was headed. But upon further review, we realized that this pretty track record was not calculated with the same method as other CTA track records. This means Attain is left having to remove a good-looking program from our website to avoid an apples vs. oranges comparison problem within our rankings and statistics. To avoid these problems in the future, here is our free public service announcement for those starting a CTA, or even those established CTAs who are looking at taking things to the next level.
Anatomy of a Style Drift
Many an investor believes that they’re fully capable of monitoring their managed futures portfolio all on their own, and in some cases, they may be able to. Unfortunately, sometimes it can be hard to keep track of the changes taking place, and – more importantly – determining which changes are important enough to inspire action. It simply depends on the subtlety of the changes and the nuance executed in evaluation. Just how nuanced are we talking? We thought we’d break down just a handful of the elements that need to be monitored and let you decide for yourself – is this something you feel can do on your own, or would you feel more comfortable knowing you have someone on your side, looking out for your best interests every step of the way?
An Open Letter to Congressional Speculation Ban Proponents
Joe Kennedy recently published an article calling for a ban on all oil speculation. Senators Sanders, Blumenthal, Cardin, Franken, Klobuchar, and Bill Nelson have proposed legislation that would force the CFTC to take “emergency” action to stop “excessive speculation” in commodity markets with pressure to eliminate it altogether… within 14 days. Representative John Larsen took it a step further, publicly calling on the President to take action personally should the bill or CFTC fail. Then you have House Democrats holding a panel on the subject, where former CFTC official and law professor at the University of Maryland, Michael Greenberger, joined ranks with Gene Guilford, head of the Independent Connecticut Petroleum Marketers Association, to continue the crusade.
Blaming the speculators is back in full swing, but we’re done playing around. We’ve crafted an open letter to the folks advocating this ban in oil speculation, and while they may not like what we have to say, ignoring this is not an option.
How Low Can it Go?
Since the peak in mid-2008, natural gas has been playing an impressive game of limbo. Just when you thought it couldn’t go any lower, down it goes. The short side of this trade is doing well for now, but how much lower can prices go?
Managed Futures Make Tax Time a Little Easier
With the calendar rolling over to April, it is that time of year for taxpayers in America – one of America’s least favorite days of the year: April 15th… tax day. While many Americans detest this day, investors surveying their gains and losses often abhor the date even more as they compile statements to find their cost basis and take a look at the taxes they owe. However, the pain endured in the payment of taxes can differ greatly, depending on the kinds of investments you hold. Turns out, if you’ve invested in managed futures, you may be letting out a sigh of relief… unlike your stock investing counterparts.
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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