This video explains Managed Futures and why I include them in my portfolio
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Managed Futures Defined:
• The term Managed Futures goes back 30 years and describes trading strategies employed by professional money managers known as Commodity Trading Advisors (CTAs)
• CTAs generally use a proprietary trading system and can go long or short futures contracts in metals, grains, equity indexes, soft commodities, foreign currencies, and US government Bonds
Managed Futures Strategies:
• There are two main strategies:
○ Trend followers
▪ Use indicators to decide when to go long or short in certain futures markets
○ Market neutral strategies
▪ Try to profit from spreads in different markets or different contracts within the same market
Managed Futures correlation to other asset classes:
• One of the primary benefits of Managed Futures is its low or negative correlation to other asset classes like stocks and bonds
○ Exact correlation numbers differ when comparing different Managed futures indexes to equity or bond indexes
Managed Futures Vehicles:
• If you are not a high net worth individual, then the best way to gain exposure to Managed Futures is through ETFs
○ Funds are small
○ Expense ratios are high for ETFs, but still under 1%
○ Some Fund Providers:
▪ Wisdom Tree
▪ JP Morgan
▪ Pro Shares
□ Be sure to check fact sheets to look at what the fund is invested in
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