Investing in managed futures may be a good option for financial planners who are looking for returns in a volatile market environment, an expert has said.
“[Managed funds] offer the ability to profit whether the markets are falling or rising [and] not only in strong markets, but weak markets,” AHL global product specialist Harry Skaliotis said.
“They have many of the same properties as [hedge funds]; you get notional funding, absolute return and low correlation [to stock markets].”
AHL is owned by UK-based fund manager Man Investments which looks after US$24.7 billion of assets.
Managed futures have the ability to go long or short in a range of asset classes including futures contracts of commodities like oil, wheat and copper.
They can also go long or short on futures indices such as the S&P/ASX 200 or the UK’s FTSE 100 and have positions in bonds, currencies and interest rate swaps.
However he warned that managed futures are not for those planners and clients who have a weak stomach for extremely rapid movements within the futures markets.
He said portfolios could lose up to 4.1 per cent of their entire value in one a day and make it back the next.
The Man AHL Diversified portfolio has returned 17.6 per cent annual for the period December 20, 1990 to March 31, 2008, outperforming the MSCI World Index’s yearly returns of 6.3 per cent for the same period.
