What's an Investor to Do?

Diversify, Diversify, Diversify

However, diversification in the same asset class is not true diversification! "Diversifying" a U.S. stock portfolio with overseas or emerging market funds has at times been a disaster for many investors. We believe it became painfully clear to investors of supposedly diversified mutual funds that true balance and diversification in a stock portfolio must be in an asset class totally non-correlated with stocks. Professionally managed futures and options, with practically a zero correlation to stocks, fits that description nicely.

Whether the economy is in a recession, economic boom, or stagnant, whether interest rates rise or fall, whether there is an economic crisis or stability in virtually any economic environment, managed futures and options present an opportunity for investment and diversification.

We believe the realization among investors that managed futures and options can be a form of "true" diversification as well as an attractive stand-alone investment is the reason why participation in professionally managed futures and options has experienced tremendous growth. In 2008 it was estimated that nearly $220 billion was under management by commodity trading advisors.

Several factors have impacted growth: First, as traditional markets have become increasingly volatile — and vulnerable to often unexpected events — institutional money management and other sophisticated investors have sought to more effectively manage overall portfolio risk through diversification. Indeed, risk and diversification are major concerns in today's market environment; Secondly, many investors are seeking higher rate of return. A number of studies indicate that a portfolio that includes managed futures can yield appreciably higher and more stable return over time than a portfolio that includes only stocks and bonds.

Next: Diversifying a Portfolio