Diversify Your Portfolio With Managed Futures
By Chuck Kowalski, About.com Guide
Managed Futures offer an attractive way to further diversify your entire investment portfolio. By adding managed futures to your investment portfolio, you will lower the overall risk to your portfolio and often increase the overall returns.
Managed futures are professionally managed investments that concentrate on the futures and commodity markets. The fund managers often take a trend following approach to their trading philosophy. This strategy often results in excellent profits when commodities are trending higher or lower. The bigger the trends, the better.
You can either invest your money a commodity pool or have it individually managed by a Commodity Trading Advisor (CTA). A Commodity Pool (CPO) is similar to a mutual fund, where the fund manager(s) invest the pool of money the exact same way. A CTA can manage individual accounts according to their risk tolerances, etc.
Many studies have been done on the benefits of adding a managed futures account to investment portfolios. Managed futures will often do well during times when other investment classes are doing poorly. Many funds have track records where they achieve above average returns almost every year.
By diversifying your portfolio with managed futures, I do not mean opening an account with a commodity broker and buying all gold call options. You want someone with experience, a proven track record and a sound trading plan to manage your commodity and futures money. Otherwise, it is pure speculation and maybe even gambling.