Our guide to managed futures and how to use them

MANAGED FUTURES

Managed futures managers, otherwise known as commodity trading advisers (CTAs), are hedge fund managers who run mostly computer-based systematic strategies on a basket of liquid, exchange-traded futures markets.

They prefer a broad selection of markets, ranging from equities, bonds, currencies to commodities. Managers take directional views, ie long or short the futures to make trading profits. The majority of managers follow trends in the markets, believing that when a market moves up there is a tendency for the price to continue to the upside showing serial correlation, or price persistence. Some refer to the herding effect, alluding to behavioural aspects of market participants. The same applies to declining price trends. Various degrees of sophistication are applied to diversification and ri...