Managed Futures funds

FinanceTrading / Investing

  • Author Mark Plummer
  • Published April 12, 2007
  • Word count 470

WealthCap offers managed futures funds which lets the investors make such esoteric plays as shorting currencies and betting on cattle prices. It is basically a strategy used by some hedge funds and the two types of investment vehicles are close that many financial firms lump them together.

Managed futures funds can be considered since this fund is for investors who require investments that have a low correlation with traditional asset classes, such as equity and fixed income investments. WealthCap provides superior investment returns through investment in a diversified portfolio of commodity contracts, while reducing the risk of loss of capital through the implementation of prudent risk controls.

This funds also suits investors who are willing to tolerate a high degree of volatility. It is a good alternative for enhancing the risk-adjusted returns of a diversified portfolio. If you are a qualified investor with a diversified investment strategy, you may want to consider adding managed futures investment to your total long-term financial plan.

Like other managed futures and hedge funds, WealthCap tries to boost its returns by investing with lots of borrowed money, which allows it to buy contracts with face values that far exceed invested equity, losses and magnifying potential profits. Both hedge funds and managed futures funds tend to favor risky and secretive investing methods.

You can get the following potential benefits of managed futures

  1. In any economic environment, you have the ability to gain (or lose)

  2. The returns have been historically non-correlated to the stock or bond markets.

  3. You have the monthly redemption rights (some funds may have a 12 month redemption penalty)

  4. There is ease for diversification.

Managed futures funds may employ leverage and might acquire positions with a face amount of as much as six to ten times or more of its total equity. The leverages magnify the effect of both profits and losses. The potential of being profitable in any type of economic climate makes the managed future funds more demanding since the trading advisors have the flexibility to go long (buy in anticipation of rising prices) or short (sell in anticipation of declining prices).

Hence this ability to go long and short gives managed futures the potential to profit (or lose) in times of

  1. Economic strength or weakness

  2. Inflationary or deflationary environments

  3. Energy abundance or crisis

  4. Upheaval or political stability.

Managed futures can provide exposure to many of the world's largest economies through currencies and interest rates that may enhance the portfolio diversification. This may help to balance portfolio returns in difficult market environments. The difference between private and public managed futures funds is that public funds are ideal for qualified retail investors and private funds are open to investment by high net worth and accredited investors. Investors who are financially eligible and willing to accept managed futures inherent fluctuations should consider managed futures investments.

Asia based independent Offshore Investment advisor.Has been involved in the financial services and financial planning business since leaving full time education in 1977.It was his intention to provide an insight in to both the mainstream products offered by the general population of financial advisors out there and also the alternative investment areas that are often overlooked or ignored. For more details please visit www.wealthcapfund.com

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