July 08, 2006

Managed Futures Funds

Managed futures funds are those that use professional mangers known as commodity trading advisors (CTAs). These managers control your money by investing in global currencies and the metal, energy, equity, and agricultural markets based on futures, forwards and options. A few salient facts about managed futures funds:

  • They are usually speculative and volatile.
  • They are generally associated with a considerable amount of risk.
  • They do not have a secondary market.
  • The transfer of such funds comes with certain restrictions.
  • They are not governed by the regulations that cover mutual funds.
  • Investors are offered no guarantees for returns of any kind; the chance that they will lose a part or all of their investment is very high.
  • Investments use considerable leverage which in turn increases the risk of losses.
  • Most trades involving managed futures funds take place in foreign exchange markets.
  • The exorbitant fees and expenses associated with managed futures funds negate the returns and profits made on trades.

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July 8, 2006 in Research | Permalink




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