Managed futures may thrive in volatile markets but investors should still limit their portfolio allocations to these funds, according to Financial Facts head of research Maggie Callinan.
Managed futures funds, such as AHL and Macquarie Winton Global Opportunities Trust, and tactical asset allocation funds such as BlackRock Asset Allocation Alpha Fund, have all performed well in the current market, she said.
"They're the funds that you've been getting 40 per cent per annum for the last year on, but don't expect to get that forever because a lot of the alpha comes from rising volatility in the market," she said.
"So be careful of these funds. They look great right now and they are perfect for the current circumstance, but when things change you could find yourself with prolonged periods of quite large negative performance from these funds."
Financial advisers should always restrict the use of these types of funds in a client's portfolio, according to Callinan.
"They're excellent for diversification but they shouldn't be used for a core investment," she said.
