Types of Alternative Investments

Managed Futures Funds

Managed futures funds are pooled investment funds that use professional money managers called "trading advisors" to trade in the global futures markets. Futures contracts are liquid and are priced on a daily basis in actively traded markets around the world. Trading advisors buy and sell futures and forward contracts in an attempt to profit regardless of market direction.

Historically, managed futures have generated long term returns that are non-correlated to those of stocks, bonds and other investment classes. Non-correlated assets can bring added diversification to an investment portfolio, possibly helping it better weather market downturns.

Global Futures Markets | Basics

Trading advisors take both long and short positions in over 200 futures markets around the globe, including currencies, energies, interest rates, metals, equity indices and agricultural commodities. These markets are impacted — positively or negatively — by geopolitical concerns, currency risk and local investor sentiment, among other factors. By trading in global markets, trading advisors can take positions in worldwide price trends that are often driven by these events.

Global Diversification  

 
 Agriculturals
Soybeans, Soymeal, Corn, Wheat, Cotton, Cocoa, Coffee, Sugar, Bean Oil, Canola
 Energy
Brent Crude, Gas Oil, Heating Oil, Natural Gas, Unleaded Gas, WTI Crude
 Metals
Aluminum, Copper, Gold, Lead, Nickel, Platinum, Silver, Zinc
Currencies
Australian Dollar, British Pound, Canadian Dollar, Euro, Japanese Yen, Norwegian Krone, Swedish Krona, Swiss Franc
 Interest Rates
Long-Term: Bund (Germany), JGB (Japan), Treasury Bonds & Notes (US); Short-Term: Eurodollar (US), Euroyen (Japan), Schatz (Germany)
 Equity Indices
DAX (Germany), FTSE 100 (UK), Hang Seng (Hong Kong), NASDAQ 100 (US), Nikkei (Japan), S&P 500 (US)<
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Trend Following System | Basics

Many trading advisors utilize the concept of trend following, where they search for sustained price trends, regardless of which direction the market is moving. In general, these trading systems are more likely to trade profitably when market prices move in a continuous direction, up or down, for sustained periods of time, and they are more likely to incur losses when market prices are erratic and frequently change direction over shorter periods of time.

Long/short trend line


Systematic Trading Systems | Basics

In Steben & Company's managed futures funds, we specifically focus on trading advisors which use a systematic trading approach.

Systematic trading is most often associated with the usage of computer models, mainly based on technical analysis of market data or fundamental economic data, to identify and make trades.

Systematic trading systems are primarily:

  • Computerized
  • Rules-based
  • Technical, based on market action, not on predictions
  • Use multiple risk management strategies 

Systematic traders use proprietary computer models to go both long and short over 200 global futures markets. They can use a number of strategies, including pattern recognition and momentum, over various short, medium, and long-term timeframes — all with a systematic risk management overlay.

Systematic Trading Systems

See Glossary of Terms for definitions

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