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Stupid Investment Of The Week: Managed Futures Fund
Managed futures do indeed protect on the downside. They were one of the few positive investment options in 2008 and early 2009. The problem is that very few of the managed futures FUNDS have been around that long. Add to that the fact that fluctuating commodity prices can and do whipsaw the performance of these funds, and you have a recipe for individual investors not having the patience to stick with a strategy like managed futures. We currently do not use any of these funds. The ones we are evaluating are very new - AQR, Forward, Natixis. Rydex has been around a while, but it did not hold up in 2008-09. I think Jaffe's putting managed futures funds in a "stupid investment" category is short-sighted, as in "what have you done for me LATELY". That's not how these funds operate, and he knows that. I think this fund group is still in its infancy, and we will have much greater clarity moving forward.
Even though investment rock stars like Andrew Lo (ASFYX, 7/30/2010 inception) and Cliff Asness (AQMIX, 1/6/2010 inception) offer managed futures funds, these funds and this alternative investment category have had very disappointing performances to date, and have yet to demonstrate that this category is a "smart" investment. Right here, right now, I would have to agree that so far this category has been a "Stupid Investment." This category has unquestionably protected on the downside,but it has had underwhelming upside participation.
Here is a list of Managed Futures funds, all of which have had unimpressive returns and relatively high expense ratios:
Comments
Here is a list of Managed Futures funds, all of which have had unimpressive returns and relatively high expense ratios:
http://money.usnews.com/funds/mutual-funds/rankings/managed-futures?page=1
Bottom Line: this is an expensive and unproven investment category and I will wait to invest in this space until I see impressive track records.
Kevin