When you’re a managed futures nerd, nothing is more perplexing than behavior contrary to data. We’re more than familiar with the return and risk metrics that make the case for managed futures as a portfolio diversifier (and publically share such any chance we get), yet the bulk of advisers still seem to shy away from recommending the asset class to their clients. In lieu of scratching our heads from now until eternity, we decided it was time to do some digging.
So we began to listen. We started asking registered investment advisers- those people that investors pay to manage their investment portfolios- what they need to see when they start making allocation decisions. What we quickly learned is that there is no black and white answer that is universally accepted. Generally speaking, there were three camps when it came to investment selection: those that believed in performance relative to cost, those that believed in risk and return analysis, and those that believed in cycle performance analysis.
Unfortunately, the answer left us more confused than ever, as managed futures fits the bill under each of these paradigms. The only conclusion we could reach was that no one was breaking the numbers down in a concise manner and sharing the results with such advisers, which is just the sort of challenge we revel in.