V.17:3 (138-143): A Rationale For Managed Futures by Charles R. Lightner

A Rationale For Managed Futures

by Charles R. Lightner

Although the futures markets are widely misunderstood even among knowledgeable investors, they serve a critical purpose in our economy; through the managed futures industry, they provide an important investment opportunity for both institutions and individuals, and they need not expose the investor to unreasonable levels of risk.

Stocks, bonds, and real estate are the largest and best-known types of investments in our economy. They have distinctly different investment characteristics, and each has a specific effect on an investment portfolio. Over the past 20 years, the products of the managed futures industry, which invests in the global futures markets, have also been shown to have unique, important, and beneficial effects when added to investment portfolios. Managed futures may represent the smallest of the alternative asset classes, but its characteristics are becoming better and better known and its value in an investment portfolio is becoming increasingly clear. Here’s a brief look at why managed futures perform as they do and how they can be understood in the context of the economic purpose served by the futures markets.