Introduction to Managed Futures

A CTA, or Commodity Trading Advisor, is a professional money manager who trades global futures markets. The National Futures Association has regulatory authority over CTAs in the United States.

Selecting a Managed Futures Program

Based upon your individual needs and risk tolerance, Penson Futures will show investors CTA's that fit their requirements. Some of the criteria we use include strategy, experience, drawdown, volatility, assets under management (AUM), minimum investment, track record, markets traded, and margin-to-equity ratio.

Notional Funds & Leverage

Most CTAs have minimum investment amounts that allow them to trade their strategies without sacrificing return. This initial investment will require you to complete new account documentation with Penson Futures, who process trades at the direction of the CTA. The assets you invest are deposited with Penson Futures, are only accessible by you, and prelims are viewable intraday. Penson Futures is regulated by both the NFA and CFTC.

FAQ

In addition to commission, regulatory and exchange fees, typically there are two fees associated with investing in Managed Futures: management fees and incentive fees. A management fee is charged by the CTA to manage the assets they trade. An incentive fee is the percentage a CTA will charge on any new trading profits on the account. The incentive fee is paid on performance: if the CTA does not make a profit you do not pay an incentive fee. Generally management fees are 2% of AUM/yr, and incentive fees are 20% of new trading profits.

Risks of Futures Trading

There are risks with every type of investment. Make sure you have collected the correct information to measure CTAs, and that you are comfortable with their strategy.

CME Managed Futures Resource Center

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