The 10 most read Managed Futures posts of 2013

Another year and another reflection back on the year that was.  Before we get too excited about 2014 and the endless possibilities, opportunities, and chances, we want to look back on the year that elected our CEO to the NFA board, the year we said goodbye to a turtle trader, and the year we suggested minting a billion dollar coin to the federal reserve. 2013 was anything but dull for Attain, and we wanted to review what you found the most interesting. Here’s the Top 10 list.

1. The Big Dogs of Physical Commodity Trading

Those of us in managed futures live in a world full of contracts, rules, regulations, and hardly a physical commodity in sight during trades. But there’s an underbelly to all of that activity called physical commodity trading that sometimes gets overlooked by those of us who merely trade the derivatives of all that oil, grains, and what not. And it’s HUGE. The 2012 combined annual revenue of their Top 10 comes out to be $1.3 Trillion (yes that’s trillion with a capital T).  But these names are hardly the household names of other billion dollar businesses like UPS or IBM or the like.

2. “No, Bloomberg, the managed futures industry is not a scam

We’re very pleased to see this article in the top 5 posts of 2013, considering it has only been published for 2 months. In early October, Bloomberg, befuddling to us, released a rancid article in which if you’re thoroughly educated about managed futures, and the full fee structure, makes the industry appear as though it’s a legal way to take peoples live savings. We’re not those people. Posting it on our blog wasn’t enough. Our “smackback” was also covered on FT Alphaville, as well as CTA Intelligence. Even though this blog post has reached thousands of readers, the Bloomberg article still gets republished by different media sources, citing slightly different statistics. It’s a long read, we know, but it’s worth your time. Trust us.

3. “Liz Cheval: From Turtle to Titan

With a heavy heart, we learned that legend, Liz Cheval, died of an aneurysm in March. Although this post is from 2011, we would only hope that this tragic event has brought attention to the influence she had on the industry, and breaking through the glass ceiling spearheading a career path for women of the next generation in this industry.

4. “Sortino Ratio: Are you calculating it wrong?

This article garnered much attention with the managed futures industry, even a response from proclaimed founder of the ratio itself. Red Rock Capital suggests the real definition of the Sortino ratio uses not the standard deviation of negative returns, but instead the ‘target downside deviation’, which is the deviations of the realized return’s underperformance from the target return.  What does that mean to the normal person who has trouble reading math equations?

5. “Mint that Coin

This post is almost a year old, but it’s as relevant as ever. As if anyone could ever forget, the government shutdown in October and the debt ceiling debate dominated media coverage in October. This article though is from the last fiscal cliff debate, not 10 months before the one in October, with the idea of minting a trillion dollar platinum coin so the president wouldn’t need congressional approval to raise the debt ceiling. It’s really quite interesting, as farfetched, and hypothetical as it is. But as we later found out this year, the Obama administration took it more seriously than we and anyone else thought. Got love those freedom of information acts.

6. “What Everybody Ought to Know about Managed Futures Asset Class Growth

It’s no secret that asset growth in managed futures has grown exponentially since 2008 and its crisis period performance. However, the number most used is BarclayHedge’s databse includes Bridgewater, the largest hedge fund in the world. Although they dabble in managed futures, we wouldn’t consider them to be in the same category as other CTA’s. We take them out of the picture to get a better representation.

7. “The Surprising Connection that the Worst Performing ETF’s Share

Upon surfing the interwebs  for useful financial commentary and statistics, we stumbled upon the Worst 10 ETF performer’s YTD from Index Universe… and can you guess what most of them have in common? Gold.  As if that was much of a surprise, but -56% YTD performance is just brutal. Five of the ten worst performers in 2013 are Gold ETF’s (4 of those Gold Miners ETF’s which we’ve discussed before here), two are Silver ETF’s (which from a commodity standpoint is highly correlated to gold), with the remaining three short VIX ETF’s.

8. “It Takes Two to Contango

Crude Oil is a dominant market when it comes to content in the futures industry, and this year was no different. While the energy market tends to display what we in the biz call “Contango,” Crude Oil displayed highest level of Backwardation (reverse Contango, if you will) in more than 15 years.

9. “Take a Look: Averaging 48k Monthly Managed Futures Returns

What does the average CTA look like? This great question was brought to us by a prospective client, and while it seems simple on the face of it, the question is actually a bit more complex, and worth a detailed explanation. This got us thinking of the question a different way that our database can understand: what is the average monthly performance, gain, loss, drawdown amount, and so forth across all CTAs. Without further ado, here’s the stats on over 48,698 monthly returns for 2,603 CTA programs going back to 1977.

10. “The ‘Problem’ with Liquid Alternative – in one nice Table

Adding ‘alternatives’ to your portfolio has never been as easy as today with the plethora of so called ‘liquid alternatives’, or mutual funds specializing in alternative investments such as managed futures. And the marketers have never had such an easy time separating the naive from their money in their bids to raise money for these funds. Enter an old five-pager by the Principal Group we dug up which explains how to utilize 15 different hedge fund strategies in portfolio construction. It has all you would ever need to know about these highly complex investments, dedicating 4 to 6 sentences to each one! Are you picking up the sarcasm?

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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.