The key distinctions between managed futures and other alternative investment strategies are accessibility, transparency, liquidity, and variety.
- Accessibility: While hedge funds, private equity funds, and venture capital investments are reserved for institutions and high net worth individuals due to high minimum capital commitments, CTA minimum account sizes can go as low as $25,000. With lower account minimums, managed futures are more accessible and practical for the average investor to add to their traditional portfolios.
- Transparency: As regulated entities, CTAs are required to report their performance on a monthly basis and track records and business processes are audited. Additionally, CTAs place trades directly into individual accounts and customers have full access to monitor all trades, calculate gains and losses, view open positions and account value on their daily statement.
- Liquidity: CTAs trade the most liquid, centrally-cleared and exchange-traded global commodity and financial futures markets. Customers also may rescind trading authority and withdraw funds from their account at any time. Unlike other alternative strategies, there are no lockout periods with a managed futures account.
- Variety: Because of the breadth of trading styles and strategies employed, investors can select a CTA or mix of CTAs that optimize return given their individual risk tolerance parameters to best compliment their traditional portfolio.