CandleFocus

Managed Futures

Managed Futures are a type of alternative investment strategy that utilizes professionally managed futures contracts. Managed futures have become popular among institutional investors, large funds, and individual investors looking for portfolio diversification and attractive hedging strategies. Managed futures can offer advantages to traditional hedge funds, producing returns with low correlation to common index funds, providing investors access to a wider range of markets, and offering the potential for higher returns.

Managed futures employ two main investment strategies. Market-neutral strategies attempt to capitalize on mispricing or mismatched spreads in the markets to create arbitrage opportunities. Trend-following strategies, meanwhile, use either fundamental or technical market signals to determine whether a long or short position should be taken. Going long means an investor is buying the futures contract with the expectation that the market price will increase, while taking a short position means they anticipate a decrease and are betting against the market.

The premise of managed futures is simple, by utilizing the futures markets investors can gain exposure to markets that are not normally accessible to retail investors. This gives investors the opportunity to protect and enhance their portfolios in a variety of ways. Managed futures can provide access to international markets and currency fluctuations, protection against inflation, and provide diversification in a portfolio. Furthermore, managed futures have a low correlation to traditional stock and bond investments and can provide steady income over the long term.

Overall, managed futures provide investors with a unique opportunity to capture returns through a variety of asset classes and strategies, making them an attractive option for many investors. By leveraging the tools available in the futures markets, investors can lower their risk, enhance their portfolios, and diversify into different markets and strategies.

Glossary Index