Are managed futures a good investment?

Offering highly diverse investment opportunities—in terms of both geography and product—managed futures are a natural choice for investment portfolio diversification. Through managed futures programs, CTAs provide investors flexible investment options that are traded on over 150 global financial and commodity markets.

What is a managed futures ETF?

Managed futures ETFs are exchange-traded funds that passively invest in a managed futures index. People often buy managed futures ETFs as a diversification tool because their performance isn’t linked with a broad market stock index, such as the S&P 500.

What managed futures strategy?

Simply put the term Managed futures describes a strategy whereby a professional manager assembles a diversified portfolio of futures contracts. These professional managers are also known as Commodity Trading Advisors (CTAs). Some CTAs manage their clients’ assets by employing proprietary trading systems.

How do you buy managed futures?

How to Invest in Managed Futures. The easiest and most cost-effective way to add managed futures to your portfolio may be to do so through a managed-futures mutual fund or ETF. By investing in funds, you get access to a collection of managed-futures investments in a single vehicle.

Are ETFs low risk?

ETFs are considered to be low-risk investments because they are low-cost and hold a basket of stocks or other securities, increasing diversification. For most individual investors, ETFs represent an ideal type of asset with which to build a diversified portfolio.

Why are trading futures risky?

One of the chief risks associated with futures trading comes from the inherent feature of leverage. Lack of respect for leverage and the risks associated with it is often the most common cause for losses in futures trading. For example, if the initial margin for gold is 2.5\%, it implied 40 times leverage.