What Are Managed Futures?

Investment management professionals have been using managed futures for more than 30 years. More recently, institutional investors such as corporate and public pension funds, endowments and trusts, and banks have made managed futures part of a well-diversified portfolio. In 2002, it was estimated that over $45 billion was under management by trading advisors.

The growing use of managed futures by these investors may be due to increased institutional use of the futures markets. Portfolio managers have become more familiar with futures contracts. Additionally, investors want greater diversity in their portfolios. They seek to increase portfolio exposure to international investments and non financial sectors, an objective that is easily accomplished through the use of global futures markets.

The advisors manage client assets on a discretionary basis using global futures markets as an investment medium. Trading advisors take positions based on expected profit potential. Most trades are matched 1:1 with investors to share in the profits and losses.