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Home » Managed Futures

Managed Futures


Managed futures can be defined as futures positions that are entered into by commodity training advisors, who are professional money managers. They enter into investments on behalf of investors so as to diversify their portfolios and minimize risk, particularly during periods of slow economic growth.

Managed futures are also known as skill-based investment strategies as they involve returns, based on a traderís unique strategies or skills. They are also called absolute-return strategies.

The main purpose of managed futures programs is to enable investors to make profits from changes in the futures prices. It is also highly suitable for long term retirement plans. As highly regulated programs, managed futures are primarily traded in market-based futures and options contracts on generic or broad baskets of assets. Thus, they look for return in macro index stock and bond markets.

How Can We Find Managed Futures?

In the United States, managed futures are run by partners, who are known as commodity pool operators (CPOs). These operators hire professional advisers who are experts in trading in commodity to manage money in the pool. These CPOs are registered with the US Commodity Futures Trading Commission.

Managed futures can be accessed through private commodity pools, public commodity pools and individually managed accounts. Commodity pools can be understood as investment funds that pool the money from a number of investors for investing in the futures markets. Structurally, they are similar to hedge funds. Hence, they are considered as a subset of the hedge fund marketplace.

Like hedge funds, managed futures are actively managed and structured as limited partnerships, which are open only to accredited investors who may be high-net-worth individuals or financial institutions. Compensation arrangements are also similar for hedge funds and managed futures. The main difference between the two is that while managed futures are traded exclusively in derivative markets such as forward, futures or options markets, the hedge funds are mostly traded in spot markets and they use futures markets for hedging.

Managed futures may experience periodic declines in value as they can be volatile. On a long term perspective, they offer consistent appreciation to investors along with long term benefits.

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