How managed futures can help diversify client portfolios

Increasing correlation between bonds and equities, rising interest rates, increased geopolitical risk and potentially overheating markets appear to have eroded many of the diversification benefits of the 60:40 balanced portfolio.

The traditional asset management portfolio, long considered a low risk, default option, may no longer be a match for today's markets. As the traditional portfolio framework looks increasingly vulnerable, uncorrelated strategies such as managed futures are now considered by many to help provide the necessary diversification to achieve long term investment goals. Among the strategies employed by managed futures managers, also known as CTAs (commodity trading advisors), trend following is by far the most commonly employed, a strategy which when included as an allocation in a diversified ...