Managed Futures

Search Dictionary

Definition of 'Managed Futures'

Managed futures (also known as alternative investments or CTAs) are professionally managed investment funds that trade futures contracts and other derivatives on a full-time basis. They are often used by institutional investors and high-net-worth individuals as a way to diversify their portfolios and generate alpha (excess returns) over traditional investments.

Managed futures strategies can be used to hedge against market risk, generate positive returns in both rising and falling markets, and exploit market inefficiencies. However, they can also be risky and illiquid, and investors should carefully consider their investment objectives and risk tolerance before investing in managed futures.

There are two main types of managed futures strategies: discretionary and systematic. Discretionary strategies are managed by a human trader who makes all of the investment decisions. Systematic strategies are based on an algorithm or model that generates trading signals.

Managed futures can be used to invest in a variety of markets, including commodities, currencies, equities, and interest rates. They can also be used to trade on a variety of time frames, from intraday to multi-year.

The performance of managed futures funds can vary significantly from year to year. However, over the long term, they have generally outperformed traditional investments such as stocks and bonds.

There are a number of factors that investors should consider before investing in managed futures. These include:

* Their investment objectives and risk tolerance
* The fees charged by the managed futures fund
* The track record of the fund manager
* The liquidity of the fund

Managed futures can be a valuable addition to a diversified investment portfolio. Investors should carefully consider all of the risks involved before investing.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.