The term managed futures describes
an industry comprised of professional money managers
who manage assets on behalf of their clients. Using
the global futures markets, they implement their systems
to take positions based on expected profit potential.
Managed futures investments have
been used by individual investors for more than 26
years. More recently, institutional investors such
as pension funds, endowments, trusts and family offices
have incorporated managed futures as part of a well-diversified
portfolio.
As an asset class, managed futures
is increasingly being recognized as an important investment
alternative that may potentially enhance the returns
and lower the overall volatility of a diversified
investment portfolio.
Growth
of Managed Futures Assets
Over the last several years, a growing
number of institutions and individual traders/investors
have allocated billions of dollars into managed futures.
According to The Barclay Group, money
under management in the futures industry during the 3rd quarter 2007 was $184.8
billion, an 8.7% increase from the beginning of the year.
This represents a 113.6% increase in assets since
the beginning of 2004.
Although futures investments involve
substantial risk and are not suitable for everyone,
the general conclusion is that diversification of
non-correlated asset classes, such as the introduction
of managed futures to an investment portfolio, can
both reduce portfolio risk and enhance overall portfolio
performance.
