We talk a lot about the diversification value of managed futures within an investment portfolio, because we think it’s important to view each piece of your portfolio in context. Each piece is a part of the investing machine, and the only way it works is when you see all the pieces working together. That being said, there’s another attraction to managed futures as an asset class, and that is performance. Past performance is not necessarily indicative of future results, but investors chasing returns will light up when looking at some of the double digit years that pepper managed futures indices history. These indices are an imperfect proxy for measuring the performance of the asset class, but their record can be alluring.

The problem for these investors is that they are often blinded by these years of double digit returns, and will overlook some of the more lackluster years, becoming frustrated when one of them pops up. They typically compare the performance of managed futures against the performance of the asset class they’re most familiar with – stocks. When stocks outperform managed futures as they have for the past three years, the frustration escalates. Why invest in managed futures if you could have your money in stocks when they’re soaring?

The past three years aren’t exactly a ringing endorsement for managed futures, but the bigger picture tells a different story.