Our weekly newsletter is out, and this time we’re addressing a concern we hear often, but have rarely seen answered. In an age of struggling pension funds, it’s common to hear commentators and spectators in the world finance joke, “Anyone who can find a way to guarantee 7% annual returns will raise a trillion dollars by the end of the year.” Realistic? Absolutely not â€“ unless you’re buying into some sort of scam â€“ which, to be clear, we don’t advise.
That being said, this goal isn’t unique to the world of pensions. Both individual investors and RIAs seem to be in constant search of that silver bullet investment â€“ the one allocation that will guarantee them a life of luxury. In a world absent of such possibilities, the request we get most often is for consistency. If they can’t get a magical 7% return, can they at least get returns they can count on?
This is still a request without a perfect answer, especially in a world where past performance is not necessarily indicative of future results. After hearing the question for about the millionth time, though, we began to wonder â€“ just how consistent has this past performance been in the managed futures space? How, exactly does it stack up to what we’ve seen out of finance’s favorite child â€“ the stock market? We ran the numbers, and what we found may just surprise you.
- - - - - -
Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.
The entries on this blog are intended to further subscribers understanding, education, and â€“ at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts.
The mention of asset class performance is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.) , and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices: such as survivorship and self reporting biases, and instant history.
Managed Futures Disclaimer:
Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.