During times of market stress, managed futures may be the investment of choice. Investors often think of commodities as non-correlated to the markets but some say the attributes of managed futures are appealing for any portfolio.
They have four distinct benefits: low correlation, increased diversification, liquidity, and opportunity. Indeed, many in the 2008 crisis were caught with too little liquidity from an overinvestment in non-liquid alternatives.
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Managed futures offer access to over 150 markets across the globe with investments in the Americas, Europe, Asia, and Australasia. They exist across a wide range of liquid and transparent markets.
Mutual funds have made managed futures more accessible to investors. They also spread advisor risk and provide access to multiple managed futures strategies by spreading allocations across a number of advisors.
Historically, managed futures have also delivered uncorrelated returns over a broad array of asset classes.
This non-correlation can offset losses in traditional markets. They have been shown to decrease risk and enhance return over time.
Managed futures may not be appropriate for every portfolio, but as more investors look to alternatives to provide returns, managed futures
may offer some attractive properties.