Our weekly newsletter is out, and we’re examining some of the Emerging Managers on our CTA rankings. You see, picking a CTA from amongst the thousands of available managed futures programs can be a daunting task, and it’s why we created the Attain Capital Managed Futures Rankings. Our proprietary algorithm gives a single snapshot of hundreds of CTAs by ranking them on a scale of 1-5 flags. While it’s no substitute for due diligence and a careful evaluation of an investor’s goals and expectations, we believe it is an excellent starting point. Of course, no methodology comes without its quirks, and close watchers of our rankings list may have noticed that, on occasion, programs will suddenly “pop” onto the rankings. One day they aren’t on the list, and the next day they appear â€“ sometimes with a 4 or 5-flag ranking.
It’s no mistake, and it isn’t that these CTAs are suddenly transforming into the best of the best at the stroke of midnight. It’s actually a consequence of the way that we filter the programs that are out there. You see, before we ever get into the nitty-gritty of comparing stats such as downside deviation and 3 year compound returns, we narrow the field with one simple rule â€“ a CTA must have at least a 36 month track record before it is eligible for inclusion.
So when an up-and-coming manager hits their 3rd birthday, so to speak, we include them in our rankings universe and calculate a ranking for them. But just finding out about a program the day it hits its third anniversary wouldn’t do our clients any good, so we take a closer look at their record and trading style prior to hitting the rankings.
What we find when looking into these emerging managers is a classic risk/reward dilemma. On the one hand, their early success could be a fluke â€“ they may not yet have proven themselves by performing well under a diverse array of market conditions. But on the other hand, these young programs could represent an opportunity to invest with the next great CTA before they make it big. Only time will tell how successful the programs which have recently jumped onto our rankings will be, but we wanted to share some quick profiles of three of the higher ranked ones: Stenger, Protec, and Global Sigma. Click on to read more.
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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.