Managed futures are considered an alternative investment to stocks and bonds. At RCG Managed Futures we strive to provide education and resources that will support the investment strategies of our clients and potential clients.
Alternative investments represent an asset class that has the potential to provide returns that are uncorrelated to the stock and bond market. When added to a traditional portfolio of stocks and bonds, alternative investments have the potential to increase returns while also reducing risk of the overall portfolio.
Managed futures are an alternative investment vehicle which offers the investor access to the futures and options markets through a professional money manager. Investing in managed futures are attractive because managed futures offer the investor advantages such as possible diversity from the stock market, market transparency, and access to diverse markets such as metals, agricultural products, financial instruments, and other regulated markets.
Professional Money Managers, known as CTAs, Control Managed Futures Accounts
Managed Futures accounts are controlled by professional money managers known as Commodity Trading Advisors (CTAs). A managed futures account is like any other brokerage account established to trade in futures, except that the responsibility for determining what trades to make, and at what time, is delegated to the CTA. In the United States, CTAs trading futures are members of the National Futures Association (NFA) and are registered with the Commodity Futures Trading Commission (CFTC).
Growth of the Managed Futures Industry
Since the 1980’s, the managed futures industry, historically, had been enjoying steady growth. In 2004, when the investment community discovered the many advantages offered by managed futures, the industry exponentially grew. The above chart shows that money under management in the managed futures industry had more than doubled from 2004 to 2010, rising from 131 billion to over 267 billion and by 2016 reached 339.7 billion.
Who Invests in Managed Futures?
Many different sectors of investors have utilized managed futures to expand and diversify their portfolio, or also to invest in a stand alone investment. As the growth of the managed futures industry has indicated, institutional investors, such as pension plans, as well as individual investors, strive to include managed futures in their asset mix. If you are already trading futures, you may want to incorporate managed futures into your trading program because managed futures can further diversify your portfolio.
If you are new to futures trading, managed futures may offer you a way to take advantage of the opportunities offered by the futures markets and the opportunity for diversification. Keep in mind, with opportunity comes risk of loss. Please carefully consider your own financial situation before deciding if managed futures are right for you.
Comparison to the S&P 500 The charts available on this website offer the ability to compare the CTA’s VAMI (Value- Added Monthly Index) to the S& P 500 index, the NASDAQ, and the Barclay CTA index, and are provided for your convenience. You can use these comparisons as part of analyzing your investment decisions.
VAMI Performance – Sample CTA
- VAMI (Value- Added Monthly Index) – VAMI is defined as the growth in value of an average $1000 investment. VAMI assumes the reinvestment of all profits.
- The S&P 500 is an index made up of 500 blue chip stocks. The index is commonly used to measure stock market performance.
- The Nasdaq composite index is a broad based capitalization weighted index of all Nasdaq stocks. The index was developed with a base level of 100 as of February 5, 1971.
- The Barclay CTA Index measures the composite performance of CTAs that have been trading for four years or more and are registered with Barclay Hedge. The CTAs that comprise this index change over time. This index is not necessarily an indication of how the CTA(s) you select will perform.
RCG Managed Futures provides these past performance comparisons as another tool for you to use while comparing these different CTAs. Keep in mind, past performance is not necessarily indicative of future results.