Key points on Managed Futures
Diversification for Today's Investor
The term managed futures
describes an industry made up of professional money managers known as
commodity trading advisors (CTAs). Investment management professionals
have been using managed futures for more than 20 years. With
practically a zero correlation with stocks, one of the most attractive
features of managed futures is its ability to add profound
diversification to an overall investment portfolio.
Managed Futures
Trading kit includes:
- Account opening documents
- Commodity Trading Advisor Disclosure Documents
Complete this Form to Receive your Free $45 Managed Futures Information
Your
personal information is kept confidential and is not sold to other
companies.
Information On Managed Futures
- Dr. Harry Markowitz, the father of Modern Portfolio Theory,
who won a Nobel prize for his work, concluded that holding securities
that tend to move in concert with one another does not lower risk.
Diversification reduces risk only when assets are combined whose prices
move inversely, or at times in relation to one another.
- A diversified portfolio of non-correlated assets can
provide the highest returns with the least amount of volatility.
- One of the most non-correlated and independent investments
versus stocks is professionally managed futures.
- A landmark study by Harvard Professor Dr. John Lintner
concluded that "the combined portfolios of stocks (or
stocks and bonds) after including judicious investments...in leveraged
managed futures accounts show substantially less risk at every possible
level of expected return than portfolios of stocks (or stocks and
bonds) alone."Lintner specifically showed how managed
futures can decrease portfolio risk, while simultaneously enhancing
overall portfolio performance. The risk of loss in trading futures can
be substantial. An investor could potentially lose more than their
initial investment.
- Jack Meyer, the head of Harvard University's Endowment
portfolio, concerning futures, stated, "Holding
commodities offers protection against the ups and downs of stocks and
bonds." Referring to commodities, he added, "They're
the most diversifying asset in the portfolio…The benefits of
diversification are indisputable. Diversification rules. It's powerful
and our portfolio is a good deal less risky than the S&P 500."
- The major source of income for the majority of CTAs is an incentive fee that can only be earned by producing on-going
new profits for an account. (Net of all costs.)
- Managed futures have tax benefits over stocks. According to
the Tax Act of 1981, short-term profits in commodities are treated as
60% long term and 40% short term. On the other hand, short-term trading
profits in stocks are treated as 100% short term. A short-term
investment is one that is held for less than one year. This favorable
tax treatment in commodities can translate to investors in upper tax
brackets, saving as much as 30% on taxes in short-term gains on
commodities versus stocks!
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- Contrary to popular belief, at certain times, managed
futures frequently display less volatility than U.S. equities and
interest rate instruments.
- Individual results may vary. A customer may not experience
these results in the future. Bear in mind in futures, the potential
exists to lose more than your initial investment.
- Studies have shown professional Commodity Trading Advisors
do experience an appreciably higher success rate than the individual
amateur trader. The fact is, there are numerous Commodity Trading
Advisors with consistent returns achieved through prudent money
management. You are, however, subject to the risk of loss no matter who
is managing your money.
The Most Important Question
We believe the most important question an investor should be
asking himself is "What do I have in my portfolio that is
non-correlated with stocks and can potentially capitalize on a
lackluster, bearish, or up-trending stock market?" For many informed,
suitable investors, there isn't a better way to properly diversify and
help protect an overall stock portfolio, than incorporating
professionally managed futures. Please contact your broker to receive a free copy of the CME
brochure at no obligation.
TRADING FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN INVESTOR MUST READ AND UNDERSTAND THE COMMODITY TRADING ADVISORS CURRENT DISCLOSURE DOCUMENT BEFORE INVESTING. BE ADVISED THAT DIVERSIFYING ONE'S PORTFOLIO WITH MANAGED FUTURES DOES NOT GUARANTEE PROFIT, OR PROTECT A PORTFOLIO FROM SUBSTANTIAL LOSSES OR VOLATILITY. AN INVESTMENT IN MANAGED FUTURES MAY HELP ENHANCE RETURNS AND REDUCE RISK. HOWEVER, THEY MAY ALSO DO JUST THE OPPOSITE AND IN FACT RESULT IN FURTHER LOSSES. THE RESULTS OF STUDIES CONDUCTED IN THE PAST MAY NOT BE INDICATIVE OF CURRENT TIME PERIODS AND MAY NOT REFLECT THE PERFORMANCE OF ANY INDIVIDUAL CTA..
