Managed Futures Introduction

Today, a variety of academic evidence demonstrates the potential benefit of using managed futures to create a better balance for a financial portfolio.

As an asset class, commodities offer strong opportunities to fine-tune a portfolio’s risk and return characteristics. Although any investment involves risk, common sense suggests that qualified investors should consider including the Commodity Asset Class as a reasonable portion of a well-balanced portfolio.

Why invest in commodities? Two of the most compelling reasons to add commodities to a traditional portfolio are their ability to provide both diversification and low correlation (low volatility). Diversification and low correlation are fundamental principles of Modern Portfolio Theory, which won Markowitz the Noble Peace Prize in Economics.

Because commodities have historically low correlations to financial assets such as stocks and bonds, adding commodities actually reduces the risk (volatility) in your portfolio – and can also significantly improve portfolio performance.

Here are what a few Industry Leaders have to say about using commodities to better balance your trading portfolio.

“By allocating only 10% of a securities portfolio to commodities, investors can vastly improve their performance.” – Study by Goldman Sachs, covering a 25 year period

“In addition to impressive historical returns, commodities provide positive returns when they were needed most.” Strategic Asset Allocation and Commodities, Ibbotson & Associates, 2006

“Combined portfolios of stocks (or stocks and bonds), after including judicious investments in managed [commodity] futures accounts, show substantially less risk at every possible level of expected return than portfolios of stocks (or stocks and bonds) alone” – The Potential Role of Managed Commodity Financial Futures Accounts, a landmark study by Dr John Lintner, Harvard University

“Portfolios with as much as 20% of assets in managed futures yield up to 50% more than a portfolio of stocks and bonds.” – Study conducted by the Chicago Mercantile Exchange

At 1st Futures Broker, we have found that our sophisticated systems, coupled with human experience and oversight, can potentially yield positive, consistent and realistic results. Not everyone will qualify for these types of investments.

Please contact us today so one of our experienced brokers can help you evaluate your trading portfolio. Perhaps a managed trading system account trading commodities would be a good fit for you and the diversification of your portfolio.