Managed Futures vs. Stocks
When viewed as an independent investment, managed futures have compared favorably with U.S. stocks and bonds, as well as international stocks, over the past decade.
A $10,000 investment in the Dow Jones-AIG Commodity Index five years ago would have returned more than 50% through Sept. 30th a stellar showing relative to stocks and bonds. The divergence helps explain pension funds growing interest in the material world.
The
potential for higher performance returns using managed futures compares well
with other asset classes in terms of risk.
One
way to compare risk is to
measure the magnitude of the worst cumulative loss in value of an investment
from any peak in performance to the subsequent low.
This worst-case, peak-to-valley scenario is called a drawdown in the futures industry.
As this Chart shows, since 1989, the worst drawdown Managed Futures have had an asset class is -15.7%. And, when compared to time periods when stocks have shown their worst drawdowns, managed futures have shown positive returns.
Barclay CTA Index Disclaimer
The Barclay CTA Index is a leading industry benchmark of Commodity Trading Advisors. There are currently 326 programs included in the calculation of the Barclay CTA Index, which is underweighted and rebalanced at the beginning of each year. To qualify for inclusion in the CTA Index, an advisor must have four years of prior performance history. Additional programs introduced by qualified advisors are not added to the index until after their second year. These restrictions, which offset the high turnover rates of trading advisors as well as their artificially high short-term performance records, ensure the accuracy and reliability of the Barclay CTA Index.
THE FOLLOWING MATERIAL MENTIONS SERVICES WHICH RANK THE PERFORMANCE OF COMMODITY TRADING ADVISORS. PLEASE NOTE THAT THE RANKINGS ONLY APPLY TO THOSE CTAs WHICH SUBMIT THEIR TRADING RESULTS. THE RANKINGS IN NO WAY PURPORT TO BE REPRESENTATIVE OF THE ENTIRE UNIVERSE OF COMMODITY TRADING ADVISORS. THE MATERIAL IN NO WAY IMPLIES THAT THESE RESULTS ARE OFFICIALLY SANCTIONED RESULTS OF THE COMMODITY INDUSTRY.
The risk of trading futures, options and foreign exchange can be substantial. Past performance is not necessarily indicative of future results. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all inclusive and its accuracy can not be guaranteed.