What is a Managed Futures Fund?

Having a diversified portfolio of investment is crucial for any investor. Traditionally, investors have divided their portfolios into equity and debt investments. With the vast number of options available nowadays, however, the same does not apply. Investors have various options when it comes to building a diversified portfolio. One such option is investing in managed futures funds. Before that, however, it is crucial to understand what managed futures are.

What are Managed Futures?

Managed futures are a type of alternative investment strategy through which investors can achieve a diversified portfolio. Instead of investing in the traditional markets, the managed futures strategy focuses on investing in the futures contracts market. Managed futures provide investors with many advantages, including diversification, liquidity, lower risks, higher rewards, etc.

With managed futures, investors can include assets from various asset classes in their portfolios. Therefore, they involve investing in both equity and debt markets, among others. Managed futures have some relationship to stock and bond markets. However, this relationship is not as strong. Despite that, managed futures provide investors with a diversified portfolio.

What is a Managed Futures Fund?

Managed futures funds, also known as managed futures accounts, are similar to other investment funds. With these funds, investors can pool their funds for a manager to handle. The managers, usually Commodity Trading Advisors, make decisions on their clients’ behalf. However, these do not include investing in traditional markets. As the name suggests, managed futures funds focus on investing in managed futures.

Like other funds, managed futures funds may take a long or short position in the market. However, these usually include investments in the commodities or futures markets. Managed futures funds managers may take one of the various approaches towards managing these funds. However, most of these approaches focus on achieving high liquidity investments.

With managed futures funds, diversification is also a focus area. Managers include several future instruments in these funds for that purpose. These may consist of stock, fixed-income or debt, commodity, foreign currency futures, etc. Usually, managers will include their market approach in their trading program that they share with their clients.

How do Managed Futures Funds work?

Managed futures funds work similarly to other funds. These are investment vehicles that trade in derivatives or futures. These may include several instruments, such as futures contracts, futures options, stock options, swaps, etc. These funds may take a long or short position, or both, in the assets they trade. These funds also don’t face any restriction in using leverage.

As mentioned, managed futures funds have managers. Usually, these are professionals known as commodity trading advisors (CTA). However, it may also include commodity pool operators (CPO). Managers in managed futures funds are responsible for managing clients’ investments in futures or derivatives. Usually, they aim to reduce portfolio volatility while also focusing on liquidity.

What are the advantages of Managed Futures Funds?

Managed futures funds can provide investors with several advantages. These are leveraged investments, which can increase returns while also reducing risks associated with portfolios. Managed futures funds can also be beneficial in achieving portfolio diversification. These funds can also help in outperforming traditional investments in some circumstances. Overall, they are less risky and provide better rewards.


Managed futures represent an alternative investment strategy for achieving a diversified portfolio. They do so by investing in futures or derivatives instead of traditional assets or securities. Managed futures funds allow investors to invest in managed futures. These can provide investors with better returns while also offering a diversified portfolio.

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