Managed Futures Trading

Managed Futures

Managed Futures are an investment within the alternative investment class. Managed futures involve trading commodities, currencies and the equity index markets. Managed Futures are a type of Hedge fund strategy allowing for investors to go long and short various global commodity and futures markets. Often investors used managed futures for diversification from their traditional investments or for hedging purposes against a specific market. Additionally, some investors are simply seeking returns beyond what traditional assets and strategies can provide and like the leverage managed futures can offer.

Managed Futures Trading

Commodity Trading Advisor (CTA)

Managed Futures Accounts are managed or traded by a Commodity Trading Advisor (CTA). CTAs are professional traders registered with the National Futures Association (NFA) to trade on behalf of investors. CTAs are regulated by the Commodity Futures Trading Commission (CFTC), and the NFA to safeguard the integrity of the derivatives markets, protect investors and ensure Members meet their regulatory responsibilities.  CTAs manage accounts with a variety of strategies.  Some employ a systematic approach using computerized trading systems to make buy/sell decisions while others use a discretionary trading style based on market knowledge or expertise.
CTA account minimums range from $5,000 to over $1,000,000.

Managed Futures Trading

Separately Managed Accounts (SMA) vs. Funds

CTAs can trade client funds through a separately managed account or pooled together as a fund. The strategy and performance are generally the same but there are a few major differences between the two account types. See comparison chart below.

Managed Options
Separately Managed Account
Fund Investment LP
Daily Liquidity
Daily Liquidity
Daily Liquidity
Trading transparency
Trading transparency
Trading transparency
Commingled funds
Commingled funds
Commingled funds
Manager has custody of funds
Manager has custody of funds
Manager has custody of funds
Loss limited to investment
Loss limited to investment
Loss limited to investment

The Growth of Managed Futures

Managed futures started over 38 years ago. It wasn’t until 1985 that the asset class hit over $1 billion in assets under management. Investors both small and large began to take interest and add capital to the industry bringing the asset under management to over $367 billion today.

Wisdom Trading has been assisting clients with Managed Futures investments for over 15 years. We can help you select a program that best fits your goals and risk tolerance.