Investing in Managed Futures
Paragon Investments is dedicated to assist clients in diversifying their portfolio by finding a CTA that matches well with the client’s interests. In doing so we can help create a custom, diversified portfolio that meets the client’s desired markets, trading strategies, and time intervals while potentially reducing the portfolio’s volatility and potentially achieving a better overall performance than traditional investment portfolios.
Why Invest In Managed Futures?
With practically a zero correlation with stocks, one of the most attractive features of managed futures is its ability to add profound diversification to an overall investment portfolio. Despite the fact that there tends to be no correlation in managed accounts vs. a traditional equity portfolio, there is no guarantee of profit and past performance in not indicative of future results.
Managed Futures offer four distinct advantages:
- Reduced Portfolio Volatility Risk
- Potential for Enhanced Portfolio Returns
- Ability to Profit in Any Economic Environment
- Ease of Global Diversification
Past performance is not necessarily indicative of future results and the risk of loss does exist in futures trading.
This chart compares the performance of the Barclay CTA Index with the Dow Jones Index and International Stock performance from January 1980 through January 2012.
As you can see, the performance of Managed Futures is independent of other asset class performance. Diversification among non-correlated asset classes is paramount to responsible investment. No investment is safe from loss, and over-exposure to any one asset class can lead to increased risk and reduced returns.
One of the most uncorrelated and independent investments versus stocks are professionally managed futures. The value of professionally managed futures was thoroughly researched by Dr. John Lintner of Harvard University in a 1983 landmark study, “The Potential Role of Managed Futures Accounts in Portfolios of Stocks and Bonds.”
Lintner wrote that “the combined portfolios of stocks (or stocks and bonds) after including judicious investments… in leveraged managed futures accounts show substantially less risk at every possible level of expected return than portfolios of stocks (or stocks and bonds) alone.” Lintner specifically showed how managed futures can decrease portfolio risk, while simultaneously enhancing overall portfolio performance.
Why Choose Paragon Investments?
Diversification is essential to any portfolio and at Paragon, we believe this is often overlooked by investors. Therefore, we have developed a thorough process of identifying our customer's needs and goals and then suggest the program that best suits those needs. We will not suggest an advisor simply because he has good returns; rather we research each of our recommended advisors and fully disclose to our customers why they are our "pick".
Our Managed Futures Specialists research each fund's performance to select our Paragon Preferred funds. To become a Paragon Preferred fund, the fund must have a substantial diversifying effect on a portfolio of stocks and bonds. We judge the fund's performance history during time periods of declining stock prices, stagnant stock prices, and rising stock prices. Granted, past performance is no guarantee of future results, but by judging the CTA's success during all types of stock market performance we can gauge the effectiveness of the CTA's strategy in reducing portfolio volatility and enhancing portfolio returns.
Learn More About Managed Futures
» Request our Managed Futures Kit with additional information on Managed Futures
» Contact a Paragon Investments' Managed Futures Specialist
Additional Considerations for Managed Futures
Managed futures and options accounts may be subject to charges for management and incentive fees beyond typical brokerage fees. Commodity Trading Advisors (CTAs) are required by the CFTC to provide you with a disclosure document prior to opening an account. The disclosure document should be carefully reviewed in order to ensure a full understanding of the principal risk factors and fees charged. Paragon Investments makes no representation of the accuracy or completeness of the returns and performances provided within the CTA’s disclosure document.
For more information complete our Managed Futures services inquiry form or contact a Paragon Investments Managed Futures Specialist at 888-452-8751 or [email protected].