Financial advisers are implementing managed futures into model portfolios to mitigate the downside in client portfolios as they continue to request diversification, particularly in difficult markets.
"The demand from advisers has been strong as they are looking to build these portfolios for clients who were affected by the global financial crisis," Aspect Capital chief executive Anthony Todd said.
"Managed futures are going to be a relatively new strategy to a lot of people, but it's one where we're seeing a huge demand for here [in Australia] and globally."
Colonial First State (CFS) formed a distribution alliance with Aspect Capital in December 2009 and the alliance has raised $350 million for the Aspect Diversified Futures Fund from the retail adviser market since its inception in March 2010.
Alongside the solid retail demand, adviser feedback from this month's CFS Investment Road Show had been positive, as it aimed to encourage a reassessment of traditional portfolio construction techniques, Todd said.
As the managed futures sector had been long-established, investors were not challenged with familiarising themselves with a new investment vehicle, he said.
"We acknowledge that [for] a lot of clients they will have never been across this sector at all, but it's actually one of the longer-standing, if not the longest-standing, alternatives investment sectors," he said.
"This is not some new investment that has just emerged over the course of the last few years; this is something that has the benefits of a very long-term track record."
Despite the growing interest from the retail market, the sector is still battling misconceptions, such as whether options, swaps or derivatives are traded.
"The markets we trade are global markets: currency, fixed income, stock markets, energies, metals and agriculture," Todd said, adding that as a result, returns were uncorrelated to stock markets, bond markets and other alternative investments.
"Over two-thirds of our clients now have daily liquidity, which means we absolutely have to be trading highly liquid markets."
