Intro To Spread Trading – The Common Spreads
While most people think of trend following when they think managed futures, the asset class has expanded to include a wider variety of strategies. We take a look at one these alternatives, spread trading, and explain several of the most common ways these trades are executed.
Hedge funds, why do we hate you? Let us count the ways…
People tend to give us a look when we scowl at the managed futures association with hedge funds. After all, if you see hoof prints, you don’t think zebras, right? The problem is that, while CTAs may leave hoof prints, their stripes are way different from their hedge fund brethren. And now there’s even more fuel for the fire…
Have You Located the Emergency Exits?
The recent highs in the stock market have been met with a fair share of cautious optimism. Memories of the plunge of a few years back have many bracing for the eventual downturn. But talking about preparing for a storm is not quite the same as exercising your ability to do so, which leads us to ask: have you located the emergency exits?
Corzine Dodging Bullets?
Last Friday, thousands of burned MF Global clients and industry defenders (ourselves included) seemed to let loose a victory cry when an email surfaced that seemed to implicate Jon Corzine in the plundering of MF Global segregated funds just hours before the futures titan went under.
But what a difference a few days can make.
Apple vs Hedge Funds
It’s not hard to see why Apple has captured the attention of the financial media as thoroughly as it has. We’ve all watched Apple go up, up and up over the past 5 years, and most investors out there have probably looked in the mirror at some point and thought, “What’s the point of all this research and hard work? Why bother doing due diligence and analyzing stats until I’m blue in the face when an investment in Apple would have trounced anything else I could have gotten my hands on, including Gold?”
Since becoming the largest publicly-traded company on Earth, ways of using Apple as a yardstick have flourished. This got us wondering… how would the Apple yardstick look when applied to the hedge fund industry?
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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