Seeking Alpha

Tim Travis'  Instablog

Tim Travis
1,001 Followers
18 Following
Send Message
Tim Travis is a veteran deep value investor and money manager. Travis has extensive experience in traditional investments such as stocks and bonds, in addition to having a unique methodology of combining options and distressed investing with value investing to generate income, reduce risk, and... More
My company:
T&T Capital Management
My blog:
T&T Capital Management Blog
My book:
Learn to Treat Your Portfolio as a Business
  • In Unfamiliar Territory Managed Futures Article-Barrons 2 comments
    May 29, 2012 11:16 AM

    I think this is a rather naive Barron's article on Managed Futures. The Barclay's CTA index has much higher turnover than the S&P 500 so funds that have the worst performance are usually eliminated from it which greatly distorts the return numbers. This article also doesn't even mention fees which I'd bet are quite high as most managed futures funds are significantly more expensive than mutual funds. I've seen a lot of CTA's and the returns have been terrible. That doesn't mean that there aren't some good funds but I believe there are a lot of problems in the industry. These funds should be limited to accredited investors only as I've seen many retirees lose a large portion of their savings primarily to pay the fees of CTA's from unscrupulous commodities brokers.

    http://online.barrons.com/article/SB50001424053111903964304577418303932326824.html?mod=BOL_hps_mag

    Themes: managed futures
Back To Tim Travis' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

This post has 2 comments:

Track new comments on this article
  •  
    CTA fees should be like hedge funds i.e.. 2% admin and 20% performance and most often for institutional investors the admin fee is negotiated lower. Doing due diligence in the CTA space is not that difficult once you understand what the manager is trying to accomplish. There are two central questions, first, how well does the manager control the downside when market conditions are poor (can he keep his powder dry?), and, secondly, how well does the manager perform under ideal market conditions? This info should be easy to obtain with any manager with a audited track record back to 2007.
    29 May 2012, 12:29 PM Reply Like
  •  
    and what about the companies turnover in the S&P? furthermore, CTA indices are net of fees, in contrast to equity indices. I don't take your argument with regard to CTA indices. Would be interesting if there's a survivorship study around. But as I can see, the "bad" elements remain much longer in a CTA or broad hedge fund index than in an equity index. But of course, as you say, one should be very cautious, then like in the investment business in general, also in the CTA space there are many "unscrupulous" actors, to use your word. Personally, I have been very happy with my substantial (i.e. approx. 20%) allocation to trend followers in my portfolio. But like any investment, there are good times and bad times and times where you should have a higher or lower exposure to a certain asset class.
    30 May 2012, 01:02 AM Reply Like
Full index of posts »
Latest Followers

Latest Comments


Most Commented
Posts by Themes
Acquisition, AIA Group, Argentina, austerity, Australia, automotive industry, bankes, Banks, banks, Benjamin Graham, Bill Ackman, Bill Gross, bill gross, Bloomberg, bloomberg, bond insurance, Bonds, bonds, bruce berkowitz, Bruce Berkowitz, Bundesbank, capital, CDO's, CDS, CFTC, charlie munger, Chemicals, china, China, Coal, commodities, Commodities, Congress, Core Capital, credit cards, credit rating agencies, Credit Ratings, David Winters, debt, Debt, Dick Bove, Dividends, Dodd-Frank, Donald Yacktman, dont-tag-as-pro, downgrade, Durable goods, E.C.B., Earngings, Earnings,
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.