Managed futures funds are an excellent way to invest in the commodity futures markets and minimize the risks involved. Commodity futures markets can include: metals, energy, global currency, and agricultural markets. A managed futures fund would invest in some or all of these markets and is overseen by a professional manager. These funds have shown that they can increase returns for the long-term investor because of its diversity and the volume of markets in which it trades. When one market is failing, other markets within the fund that are performing well can compensate for the failing one. Once the decision is made to invest in futures funds, it is important to conduct research to determine which futures fund in which to invest. A managed futures fund will have a professional manager in place to conduct the trading and investing on the behalf of a client in accordance with the client’s specifications.
Several things must be considered when choosing a managed futures fund. Performance over a certain length of time is not the only criterion. The client must determine how much money is needed to make the initial investment. Some managed futures funds require an initial deposit of a few thousand dollars; some require as much as $1 million. Another determining factor is to make sure that the fund that is chosen is accepting new investors. Some funds may have an impressive track record, require a low initial deposit, and contain all of the markets that the client desires, but is closed to new investors. Most managed futures funds have various fees that are charged to the client. These fees could include management and brokerage commission fees.
Since managed futures funds are a conglomerate of various markets, it is imperative to make sure that the fund that is chosen includes the markets that are of interest to the client. A client who is not interested in silver will not be satisfied with a managed futures fund that invests heavily in the silver market. A client who is only interested in investing in native markets would not be interested in a managed futures fund that invests in foreign markets.
Some managed futures funds are more heavily leveraged than others, therefore would involve a greater degree of risk. The number of markets and the degree of speculation employed in the investing process affect the degree of risk. A managed futures fund that trades in more than 50 markets would involve less risk than a fund that trades in only 20 markets. It is important to consult with a professional financial planner when deciding to invest in managed futures funds.