A
number of factors have been
responsible for the growth in
managed futures trading:
-
The stock
markets in the U.S. experienced the first
consecutive three-year decline in 60 years,
and still have not surpassed the highs made
in 1999. Because of the disappointing equity
returns and a current economic environment
which we believe to be favorable to CTAs,
investors are drawing their attention again
to Managed Futures.
-
Sophisticated
investors have sought more effective methods
of diversification. A number of studies
indicate a portfolio including managed
futures may yield more stable returns over a
period of time relative to portfolios
including only stocks and bonds.
-
The enormous
expansion of futures to encompass stock
indexes, debt instruments, currencies, and
options as well as conventional commodities
has created new categories of profit
opportunities. The global nature of today's
futures markets also has expanded the scope
of investment possibilities.
-
Studies
conducted by the Chicago Mercantile Exchange
(CME) indicated that Managed Futures
accounts may be more profitable on the
average than accounts that individuals trade
on their own.
In the last 20
years, investor participation in the world's
stock and bond markets has dramatically
increased in large part due to the growth of
mutual funds, individually managed stock
accounts and trading technologies. Similarly,
investor participation in alternative
investments has increased through investor
participation in futures markets, which include
managed futures accounts.
The chart below demonstrates the growth in
managed futures since 1980.
Over the last several years, a growing number of
institutions and individual traders/investors
have allocated billions of dollars into managed
futures.
According to The Barclay Group, money under
management during the 4th quarter 2004 was
$131.9 billion, a 12.06% increase from the
previous quarter. This represents a 52.49%
increase in assets since the beginning of 2004.
Next Article:
Benefits of Managed Futures
