Are managed futures riskier than stocks?
On a level playing field, managed futures are no riskier than stocks. However, it is important to understand that the use of leverage available in futures creates the potential for unlimited risk. The prudent use of this leverage is one of the most important money management rules in futures trading. Stocks and futures are both investment vehicles employed by money managers as a means of making profits. Some managers succeed where others falter. Remember, it’s not the investment vehicle that makes or loses money, but rather the money manager’s skills and abilities that will determine results. In his June 2002 academic study, “Benefits of Managed futures,” Thomas Schneeweis, Professor of Finance, at the University of Massachusetts states: “Managed futures are not more risky than traditional equity investment. Investment in a single commodity trading advisor is shown to have risks and returns, which are similar to investment in a single equity. Moreover, a portfolio of commodity trading
