We shared some of the most read posts of 2013 earlier this week, and today give you the 10 posts which we thought were pretty darn good, but which you just didn’t seem to have time to read (according to the stats). Maybe you’re new to the blog, maybe you were at your kid’s school play, maybe you just plain didn’t like what we had to say… Whatever the reason, here’s 10 posts that weren’t widely read (but in our humble opinion – should have been…)
It was a shock to many, when 4 of the 5 commissioners representing the SEC made an unprecedented decision to strip the multi-decade old ban on general solicitation by hedge funds. While we often tell anyone who will listen that managed futures are not hedge funds… in this case – the privately offered funds of managed futures programs are surely part of ”hedge fund advertising.” So what does this landmark ruling mean for the commodity pools/managed futures funds sort of caught in between securities and futures regulations?
We noticed Meb Faber posted a blog visualizing the biggest monthly declines each asset class has had dating back to 1972, but it omits managed futures. We threw managed futures in the group to see how it stacks up.
Back in July, 361 Capital’s Managed Futures mutual fund had been named the best performing fund over the past 12 months, according to Morningstar. But we can’t help but think this is a little like being the cleanest dirty shirt. So how does their 8.12% return over those 12 months rank amongst the 784 programs in our database and against our recommended list. Hint, it isn’t #1.
We’re not regular readers of the Seattle Times, but when a client saw managed futures mentioned in a recent Q&A in the investing section – they pointed us to the piece… The reader said they were considering investing in managed futures, but wanted the columnists’ advice first. The columnist responds by stating that managed accounts are only good for managers and not for anyone else, instead suggesting investing in the XLE energy based ETF. Let’s take a look at a side by side comparison to see which one is better, shall we?
What’s the only thing worse than being long gold? Being long a gold mining company who has massive exposure to the plunging gold price, as well as some added extra exposure in terms of the company’s management, fixed costs, debt, and so on… Just look at the performance of these commodity producer/miner ETFs versus the commodity ETFs versus the actual commodity itself.
Our friend Jeffrey Dow Jones (yes, that’s his real name) over at the Cognitive Concord Blog was out with the above titled post , and it couldn’t be more timely in our opinion.
It seem like just yesterday Eddie Murphy and Dan Aykroyd were in the old Comex pits making millions off of Frozen Orange Juice Concentrate. Now 30 years after Trading places, it looks like the hype surrounding Orange Juice is fading, with only 20,000 outstanding contracts.
How on earth does a weather picture of the Wyoming & South Dakota have anything to do with stocks not being correlated to commodities? Well, the storm ended up killing tens of thousands of cattle in South Dakota because they hadn’t grown their winter coats yet. That came out to be 15 to 20% of cattle in South Dakota. But how does this prove stocks are non correlated to the stock market?
We not all that into “foreign exchange portfolio’s” seeing people get too carried away trying to get foreign exchange exposure without really understanding what that is or does. However, one of Eclipse’s paper does a sufficient job highlighting managed futures, and suggests combining FX Trend Following with FX Carry Trade looks better than by themselves. But it comes with the caveat of a higher correlation to the FX Carry Trade during crisis periods.
We’ve pointed out from time to time that when a CTA grows bigger, its monthly gains and losses often grow smaller. CTAs don’t really come any bigger than Winton, and they’ve definitely been a prime example of this trend. Well as it turns out, not everyone is excited about the lower volatility, lower risk/return version of the Winton they once knew.