About Managed Futures
Background on Managed Futures
Managed futures is a segment of the hedge fund industry; managers trade a range of futures and foreign exchange markets with the aim of profiting from price movement.
Commodity Trading Advisor (CTA) is the name given to the investment managers in managed futures; CTAs are in fact traders, who trade many markets, not just commodities. CTAs trade futures on equities, bonds, interest rates, currencies and commodities and take both long and short positions. CTAs employ a range of trading strategies of which Trendfollowing is the most common.
Trading in commodities dates back to the mid-1800s when the Chicago Board of Trade was established. The managed futures industry became established in the 1980s when futures exchanges expanded to accommodate hedging in a growing range of financial markets.
The managed futures industry has grown over time and assets under management have increased as investor demand for liquid alternative strategies has grown.
Assets under management in managed futures is estimated by BarclayHedge to be $318bn as of the fourth quarter 2019 which means it accounts for approximately 10% of the total hedge fund industry. There are a wide range of managers in the industry, both in terms of trading style and size, ranging from managers with less than $10m to managers with over $10bn in assets.
Investing in managed futures is not suitable for all investors given the level of risk involved, including the risk of loss.