Mte Financial Services

Over the past seven years, the amount of money managed by professionals in commodity futures markets has more than quintupled! According to hedge fund tracking firm Barclays, assets under management increased by approximately $ 41 billion in 2001 to over 219 billion dollars today!

As global demand for commodities continues to heat up and investors increasingly (both institutional and individual) are beginning to see the products as a viable investment vehicle, this trend should continue. This growth has also increased the need for effective ways to choose a commodity trading adviser. In this article we will explain what we feel are some of the best tools and methods available to individual investors when choosing products that have passed eventually to invest in.

First things first, we'll define what managed futures are and what they are not. Managed futures are not stocks or ETF's that simply invest in commodities. Managed futures accounts are investments whose funds are invested in mostly leveraged, future dated contracts for the actual physical commodities or financial instruments. Commodities can include sectors such as food, energy, commodities and financial instruments like interest rates and stock indices.

The leverage, risks and rewards can be (but not always) much higher when investing in futures markets compared to the stock market. Managed futures investments in the United States are governed by both the National Futures Association and the Commodity Futures Trading Commission (unless the company / fund have "exempt" status). Regulated companies are permitted Commodity Trading Advisors (CTA) or Commodity Pool Operators (CPO). However, keep in mind that even if a company is licensed or regulated, this is in no way an endorsement of the potential performance. Futures Trading can carry great risk and is not for everyone. Investors should familiarize themselves fully with all applicable risks and information before making any investments.

Find lists of potential candidates to be sorted is relatively easy if you know where to look. Companies such as Barclays Trading Group, research Stark, Autumn Gold and investments Altegris have databases of manager information available. A resource that we particularly like is www.IASG.com . Institutional Services Advisory Group provides one with registration) online database (free of more than 450 programs. In addition, programs can be sorted by a wide range of parameters such as minimum account size, funds under management various performance measures, etc.

The only problem we see with online databases is that it can become a bit overwhelming to try to limit your choices to a handful of managers. To make the process a little easier, we would like to share with you what we think are some of the performance indicators most important to pay attention to.

First recommendation, forget return! Statistics is often less significant return of a manager. How can you ask? What matters is adjusted for risk RETURN. Just because someone bet the farm and was lucky not to say it was a good idea. Sooner or later (usually sooner) erase inevitable happens with a manager paris too aggressive.

There are a number of measures of traditional risk-adjusted return, the most popular of them being the Sharpe ratio. The Sharpe Ratio compares the return relative to the underlying volatility of the investment. Although we basically agree entirely with the logic of the Sharpe ratio, we believe it has a serious defect. The default is that the Shar.