All things considered, why can investment portfolio performance be improved by including managed futures?
There’s no single reason, but high on the list is that managed futures may perform best when other investments are performing relatively poorly. On the occasions of the S&P 500’s two worst declines during the past decade, managed futures recorded net profits of 9.7% and 18.6%. A study by University of Massachusetts Finance Professor Thomas Schneeweis compared the S&P’s worst 12 months and best 12 months since 1985 and found that managed futures posted gains during both periods. An important advantage of futures is the opportunity they provide to respond swiftly on a highly leveraged basis whenever and wherever in the financial and commodity markets major price movements occur — either upward or downward — and to do so without liquidating other investment holdings or adding to overall portfolio risk.
