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Portfolio Diversification with Managed Futures

Portfolio Diversification with Managed Futures

The basic idea of “portfolio diversification” is to spread your risk among multiple non-correlated investments. There is risk in all investing, but not all risk is the same. What causes one investment to lose may cause another to profit while having no effect on a third. Spreading your money around has the potential to lessen the volatility you might have experienced with a single investment while maintaining positive performance overall. However, portfolio diversification is not a guarantee of profit.

Unique Benefits of Managed Futures for Portfolio Diversification

Since it makes sense to spread your money between multiple opportunities with little correlation to each other, we suggest you think about Managed Futures as one of those opportunities. Consider these benefits:

Portfolio Diversification

  1. Opportunity to reduce the volatility of an investment portfolio
  2. Opportunity to enhance overall portfolio returns
  3. Many investment choices
  4. Opportunity for profit in a variety of economic environments
  5. Liquidity allows for access to your money quickly
  6. Managed account and fund structures
  7. Performance-based fees available

“But divide your investments among many places, for you do not know what risks might lie ahead.” Ecclesiastes 11:2 NLT

 

As an asset class, Managed Futures programs generally have little correlation with traditional investments like stocks and bonds. When you understand what Managed Futures are and how Commodity Trading Advisors (CTAs) use the futures markets, this makes intuitive sense. For example, while a regular mild recession might cause stock prices to decline, they may have little to no effect on a CTA with a short position in sugar or coffee. Combining Managed Futures with traditional assets may improve the efficiency of your overall investment portfolio. Merely diversifying your money, however, does not guarantee success or profit. Each Managed Futures opportunity must be carefully evaluated in terms of risk. This is where our Investment Specialists provide a helpful service as they can explain the unique risks and strategies of individual opportunities.

Portfolio Diversification Data

How does portfolio diversification look when you actually research the numbers? Thankfully, the numbers support our philosophy here. There is good research to show the historical benefits of including Managed Futures in an investment portfolio. Click on the link below to see a collection of charts and graphs illustrating our point.

Managed Futures Charts

Speak to a Ascent Investment Specialist to learn more about Portfolio Diversification now. 

Keep in mind, there is risk of loss no matter who is managing your money. Diversification is not a guarantee against loss. 

  • CTA Database

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    TRADING FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. THERE ARE NO GUARANTEES OF PROFIT NO MATTER WHO IS MANAGING YOUR MONEY. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

    All Ascent Capital Management (herein after as “ACM”) associated information, publications, reports, including the ACM website and the websites of its DBAs, and any information distributed by ACM shall be construed as a solicitation. ACM does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. The following link or document may contain information obtained from sources believed to be reliable, and or has been created by another firm or body. Such information is being provided as a courtesy but such information has not been independently verified and ACM does not guarantee its accuracy. Information and opinions expressed by a source or author other than ACM are not necessarily supported by ACM and ACM makes no guarantees of such. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Phone calls to and from ACM or its DBAs may be recorded.

    THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING: IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS.

    IF YOU PURCHASE OR SELL A COMMODITY FUTURES CONTRACT OR SELL A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS OR SECURITY DEPOSIT AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT. UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A ‘‘LIMIT MOVE.’’

    THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A ‘‘STOP-LOSS’’ OR ‘‘STOP-LIMIT’’ ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS. A ‘‘SPREAD’’ POSITION MAY NOT BE LESS RISKY THAN A SIMPLE ‘‘LONG’’ OR “SHORT” POSITION.

    THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY INTEREST TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THE CTA DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF THE PRINCIPAL RISK FACTORS AND EACH FEE TO BE CHARGED TO YOUR ACCOUNT BY THE COMMODITY TRADING ADVISOR (“CTA”).

    A COMPLETE DISCUSSION OF FEES AND CHARGES ARE REPORTED IN THE CTA’s DISCLOSURE DOCUMENT. MANAGED FUTURES MAY NOT NECESSARILY BE PROFITABLE UNDER ALL MARKET CONDITIONS AND ALSO MAY NOT NECESSARILY REDUCE VOLATILITY.

    THIS MATERIAL MAY MENTION SERVICES, WHICH RANK THE PERFORMANCE OF COMMODITY TRADING ADVISORS. PLEASE NOTE THAT THE RANKINGS APPLY ONLY TO THOSE CTAS WHO 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. BE ADVISED THAT AN INDIVIDUAL CANNOT INVEST IN THE FUTURES INDEX ITSELF AND THE ACTUAL RATES OF RETURN FOR AN INDIVIDUAL PROGRAM MAY SIGNIFICANTLY DIFFER AND BE MORE VOLATILE THAN THE INDEX. INVESTORS SHOULD NOTE THAT ADDING MANAGED FUTURES TO AN EXISTING STOCK PORTFOLIO CAN POTENTIALLY INCREASE THE ANNUAL RETURN OF THAT PORTFOLIO. THE ADDITION OF MANAGED FUTURES TO A PORTFOLIO HOWEVER CANNOT PROTECT YOU FROM LOSS AND IN FACT CAN DECREASE A PORTFOLIO’S EFFICIENCY.

    By agreeing, you acknowledge the risks described above.

    • I AgreeI Disagree

  • Davis Commodities, LLC – Ag Program – QEPs Only

    Click a button at the bottom of this page to continue.

    TRADING FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. THERE ARE NO GUARANTEES OF PROFIT NO MATTER WHO IS MANAGING YOUR MONEY. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

    All Ascent Capital Management (herein after as “ACM”) associated information, publications, reports, including the ACM website and the websites of its DBAs, and any information distributed by ACM shall be construed as a solicitation. ACM does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. The following link or document may contain information obtained from sources believed to be reliable, and or has been created by another firm or body. Such information is being provided as a courtesy but such information has not been independently verified and ACM does not guarantee its accuracy. Information and opinions expressed by a source or author other than ACM are not necessarily supported by ACM and ACM makes no guarantees of such. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Phone calls to and from ACM or its DBAs may be recorded.

    THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING: IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS.

    IF YOU PURCHASE OR SELL A COMMODITY FUTURES CONTRACT OR SELL A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS OR SECURITY DEPOSIT AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT. UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A “LIMIT MOVE.”

    THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A “STOP-LOSS” OR “STOP-LIMIT” ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS. A “SPREAD” POSITION MAY NOT BE LESS RISKY THAN A SIMPLE “LONG” OR “SHORT” POSITION.

    THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY INTEREST TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THE CTA DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF THE PRINCIPAL RISK FACTORS AND EACH FEE TO BE CHARGED TO YOUR ACCOUNT BY THE COMMODITY TRADING ADVISOR (“CTA”).

    A COMPLETE DISCUSSION OF FEES AND CHARGES ARE REPORTED IN THE CTA’s DISCLOSURE DOCUMENT. MANAGED FUTURES MAY NOT NECESSARILY BE PROFITABLE UNDER ALL MARKET CONDITIONS AND ALSO MAY NOT NECESSARILY REDUCE VOLATILITY.

    THIS MATERIAL MAY MENTION SERVICES, WHICH RANK THE PERFORMANCE OF COMMODITY TRADING ADVISORS. PLEASE NOTE THAT THE RANKINGS APPLY ONLY TO THOSE CTAS WHO 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. BE ADVISED THAT AN INDIVIDUAL CANNOT INVEST IN THE FUTURES INDEX ITSELF AND THE ACTUAL RATES OF RETURN FOR AN INDIVIDUAL PROGRAM MAY SIGNIFICANTLY DIFFER AND BE MORE VOLATILE THAN THE INDEX. INVESTORS SHOULD NOTE THAT ADDING MANAGED FUTURES TO AN EXISTING STOCK PORTFOLIO CAN POTENTIALLY INCREASE THE ANNUAL RETURN OF THAT PORTFOLIO. THE ADDITION OF MANAGED FUTURES TO A PORTFOLIO HOWEVER CANNOT PROTECT YOU FROM LOSS AND IN FACT CAN DECREASE A PORTFOLIO’S EFFICIENCY.

    By agreeing, you acknowledge the risks described above.

    • I AgreeI Disagree
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