Managed Futures for All

By Collins, Daniel P. | Futures (Cedar Falls, IA), August 2005 | Go to article overview

Managed Futures for All


Collins, Daniel P., Futures (Cedar Falls, IA)


With a regulatory bar for creating public pools, restrictions on trail commissions minimum investment levels for managed accounts, few investors have access to managed futures. However, some brokers are trying to bridge the gap by offering managed futures to retail.

Managed futures as an asset class, to many, is a closely held secret. Though the likes of John W. Henry, Millburn Ridgcfield and Campbell and Company have been around for several decades with returns that hold up against the more popular alternatives and have offered retail access through broker dealer networks, the vast majority of managed futures programs are out of the reach of ordinary investors.

There are only a handful of open public commodity pools available to the retail public and the vast universe of commodity trading advisors (CTA) all seem to require minimums of $500,000 or more (see "Managers want big money, right"). Perhaps the main problem is that the terms futures and investment have often been thought of as mutually exclusive.

Because futures always have been viewed as a highly speculative field, whether you talk to an average Joe or a Wall Street broker, they never have gained mainstream attraction as a viable asset class. Retail investors can pick from thousands of long-only equity based mutual funds and bond mutual funds and even real-estate investments trusts (REIT), but they are rarely presented with the managed futures option.

The way investments are offered to the retail community involve "securitizing" larger investments and offering them in smaller chunks. While that is efficiently done in long-only mutual funds, in futures the regulatory hurdles are multiplied, making the creation of public pools cost prohibitive.

While the Managed Funds Association has long sought freedom from the yoke of dual regulation, any entity seeking to create a public pool faces a cost ten times greater than creating a mutual fund and the close supervision of multiple regulators. There is a large gap between the handful of retail public commodity pools and the universe of 600 plus CTAs who target institutional and high networth clients. However, a group of enterprising futures commission merchants (FCM) are attempting to fill the void by finding emerging CTAs who accept smaller minimums and offer managed accounts at a more reasonable investment level.

Rick Gallwas has attempted to fill that gap, first through his firm Zap Futures and now as president of RJO Futures, a division of R.J. O'Brien, which purchased Zap. "Am I trying to give people professional money managers at a lower entry level than $500,000? Yes, I am working with people to grab this marketplace of emerging CTAs because, obviously, the people taking $500,000 minimums and managing $500 million started somewhere," Gallwas says. He sees a great desire for professionally managed futures from people with between $25,000 and $100,000 to invest. On the individual level you are trying to give the retailer the chance to work with professional money managers."

Gallwas is not alone. FCMs Peregrine Financial Group (PFG), Man Futures and American National Trading Corp. and several others all have been working and developing relationships with emerging CTAs to offer to their clientele.

PFG has gone a step further by holding a CTA challenge that awards the best performing emerging CTA with a $500,000 allocation. The award is not the goal, but a way to attract emerging managers. Michael Killian, SVP at PFG, says their clientele requires them to think small. "Given the client profile that PFG has, more retail oriented, and clients that would invest in CTAs or funds in the $10,000 to $100,000 range, we need to find emerging CTAs, as their minimum requirement tends to be in that $25,000 to $50,000 range," Killian says.

Michael Herron, national director of brokerage services at American National Trading Corp. (ANTC), is two years into a program trying to bring managed futures to the retail investor. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Managed Futures for All
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.