Alternative Investment Conference Spotlights Managed Futures

We just couldn’t get enough of the conference action last week with the NIBA and the CTA Expo, and spent the beginning of this week exploring what the “Alternative Investments Conference” has to offer. Here are some highlights from day one yesterday:

In her conference opening presentation, Demystifying Alternatives: The ABCs of Alternative Assets, Strategies and Vehicles, Nadia Papagiannis of Morningstar Inc. suggested that alternative investments should receive a larger portion of portfolio allocation (we covered that a while back, why you’re not happy):

 “Five percent is really not going to make a difference” said  Ms. Papagiannis on Monday, “but 20% will start to make a difference.”

“If I were doing it, I would pick an equity long-short strategy, a managed-futures strategy and a market-neutral strategy as a kind of bond substitute, and I would equal-weight them into the portfolio,” said Papagiannis. “Prior to 2008, a lot of investors were too heavy into equities, and now a lot of advisers are telling me their clients are too heavy into bonds.”

As part of a panel discussion entitled The Alternative Asset Allocation Model, Steve Medina, Head of Global Asset Allocation & Senior Portfolio Manager at John Hancock suggested advisers should look to balance their portfolio better by funding an alternatives allocation half from equities and half from bonds.

“If you fund alternatives 100% from bonds, you’ll get better returns but get an increase in risk,” said Medina. “If you fund 100% from equities, you will reduce the overall risk, but there’s a cost to that and you will hold back a little bit of total return over time. Therefore, start with the concept of funding half from equities and half from fixed income.”

Due diligence was another popular topic on day one. According to David Lafferty, an investment strategist at Natixis Global Asset Management, most investors follow one of two different approaches with regard to due diligence.

“There are those people who are looking for great returns, and they will pay a lot of attention to a track record even if they don’t fully understand the strategy. And there are those who will like the story and the strategy, and they don’t care as much about the track record,” said Lafferty.”

Members of the Attain team are over there again today for Day 2 and we’ll bring you more tomorrow.

 

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DISCLAIMER

Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.

The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex, and is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author.

*The mention of specific asset class performance (i.e. +3.2%, -4.6%) is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.), and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship and self reporting biases, and instant history.

The mention of general asset class performance (i.e. managed futures did well, stocks were down, bonds were up) is based on Attain’s direct experience in those asset classes, estimates of performance of dozens of CTAs followed by Attain, and averaging of various indices designed to track said asset classes.

It should be noted that past market performance is not indicative of future market movement.No market data or other information is warranted by Attain Capital Management as to completeness or accuracy, express or implied, and is subject to change without notice.

Managed Futures Disclaimer:

Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.