Managed Futures

Modern Portfolio Theory

Modern Portfolio Theory (“MPT”) is also called “portfolio theory” or “portfolio management theory.” MPT is a sophisticated investment approach frst developed by Professor Harry Markowitz of the University of Chicago, in 1952. Thirty-eight years later, in 1990, he shared a Nobel Prize with Mer- ton Miller and William Sharpe for what has become the frame upon which institutions and investors construct their investment portfolios. Modern Portfolio Theory allows investors to estimate both the expected risks and returns, as measured statistically, for their investment portfolios. Click here to learn more...

A Managed Futures account is an account in which a registered Commodity Trading Advisor (CTA) is given responsibility to make all trading decisions. This authority is delegated by the account holder to the CTA through a limited power of attorney which may be withdrawn at any time. CTAs are registered with the Commodity Futures Trading Commission (CFTC), an agency of the federal government, and a member of the National Futures Association (NFA) a self-regulatory organization authorized by Congress in 1982. CTAs are professional money managers who manage an investor's assets using investments in the commodities markets just as a stock mutual fund manager would invest his client's assets in a variety of different stocks.

As a diversified portfolio of uncorrelated asset classes, managed futures accounts have the potential to provide positive returns with potentially lesser amounts of volatility and risk. Using global futures markets and an investment medium, CTAs take long and short positions in futures contracts, government securities, and options on futures contracts. Based on technical analysis and expected potential, CTAs direct investments in areas such as: global currency, interest rate, equity indexes, metals, grains, energy, agricultural products and commodities. Please be advised that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money, and past performance is not necessarily indicative of future results. An investor must read and understand the current disclosure document before investing. An investor could lose more than the initial investment.

When managing futures, CTAs can utilize various strategies and take potential advantage of price trends. They can buy futures positions in anticipation of a rising market or sell futures positions if they anticipate a falling market. CTAs can even use strategies employing options on futures contracts that allow for profit potential in flat or neutral markets. Managed futures offer many potential benefits and advantages as a diversified investment opportunity. As an alternative investment, managed futures may help balance portfolio volatility risk and improve the diversification of investment portfolios. Participating in global markets, managed futures have profit potential and risk reduction potential across a broad range of non-correlated markets. Unlike stocks and bonds, Managed futures have the ability to profit in any economic environment, including up, down, and even markets that are sideways. Having low correlation to the other markets and the ability to perform independently of traditional investments, managed futures may potentially help balance portfolio risk and potentially maximize profit in market cycles.