Managed futures are diverse strategies that trade commodity futures and commodity forwards contracts. The value of a contract is tied to an underlying commodity: agricultural products, metals, petroleum, currencies and financial instruments, among others.

Futures are exchange-traded contracts to purchase or deliver a specified commodity, financial instrument or currency at a future time. Forward contracts are traded over-the-counter and is an agreement to purchase or deliver a specified commodity, financial instrument or currency at a future time at a predetermined price. Managers who trade futures and forwards contracts are known as commodity trading advisors (CTA).

Types of Futures Traders
In general, CTAs follow two main trading strategies: technical and fundamental.

• Technical traders—also known as systematic trend followers—rely on sophisticated quantitative models to identify price trends in futures markets. Once a trend is identified, the manager will hold long or short positions, until the model signals a change
• Fundamental traders rely on supply, demand and other relevant industry factors to derive price forecasts for various futures contracts. These managers then position their portfolios based on the price forecasts

The Case for Managed Futures

• Global Diversification through participation in more than 80 markets around the world
• Potential to enhance portfolio returns, due to historically low-to-negative correlation with equity and fixed income markets*
• The ability to profit from diverse investment environments because commodity trading advisors can purchase or sell short futures in anticipation of rising or falling market

*Correlation based on monthly index returns from Dec. 1996 – Dec. 2006; Indices used: JP Morgan Government Bond Index Global, MSCI World, HFRI Weighted Composite Index, GPR 250 Global, DJ AIG Commodity Index.

Past performance is not indicative of future results.

Note: There are risks specifically associated with investing in managed futures funds. They include, without limitation, the risk of total loss; a limited ability to redeem from such funds (e.g., there may be no secondary market for the interests of the fund); and the risk that a fund’s fees and expenses may offset and profits or gains.