My capital is currently allocated within a mutual fund family, Why should I pay a traditional money manager?
Allocations within a mutual fund family are good. Offsetting inherent traditional portfolio risk using a non-correlated strategy is the foundation of modern portfolio theory. By integrating managed futures into a composite investment, the risk/return parameters of any strategy diversified among mutual funds is optimized.
Prove it to yourself. Evaluate the risk/ return potential of your current composite portfolio. Maybe use monthly statements and excel to build a $1000 VAMI (rate of return applied to a $1000 index). Ask your advisor (or do it yourself). Find a managed futures strategy you can live with and also build a $1000 VAMI for it. Graph both data sets and look at the profitability movements. They should be non correlated. The investment selected matters less than the market movements of commodities relative to other investments. We set up an excel file for you. The chart below was created in that file as an example. Download the managed futures excel file here.
Although futures also have negative performance, notice the price movements of each index. Unless stock index options are used, market movements in commodities are independent of most traditional portfolios.
Can a futures investment be used without integrating a traditional strategy?
YES. Surgery can also be performed without anesthesia. Seriously, managed futures or any alternative investment can be working well for millions of investors. Growth of hedge funds and managed futures supports the statement.
When built in isolation, an alternative strategy is ALWAYS speculative. Speculation increases risk - asset allocation reduces risk.
WHY? Futures markets are established ONLY for the purpose of hedging. An optimized hedge strategy first defines cash market risk, then uses futures to offset that risk. Both sides of the transaction are evaluated to determine how successful the strategy is. To optimize prudent allocation and degree of risk necessary to achieve a goal, we believe your entire investment structure should be considered.
I currently have an advisor and only want your services for managed futures. What do you perceive as prudent?
Tell your advisor what you want. Bring their attention to this article and http://www.safemoneymetrics.com. Let your advisor work with us, or any professional registered at the Investment Professional Portal. If a traditional advisor is well informed and has accurate beliefs, they will enhance the entire strategy development process.
What can convince me that your strategy is superior to what I currently have?
We have no desire to convince you of anything. We can build a risk management model for you. Make your own decisions.
Tell me what you would do if the market collapsed, went up or was just volatile?
Managed futures (without options) can be adaptable to most circumstances. When well designed, the sensitive investment alters itself to changing market conditions. It should perform in bull, bear and sideways markets. In its' purest form, strategies are direct, liquid and offer a time value use of capital totally unique to any investment that tradition or illiquid hedge funds can offer.
Stock, bond, mutual funds, hedge funds and other investments may be indirect or illiquid. The degree of leverage used with all traditional strategies contributes to profitability movements that are contrary to possibilities available with managed futures and other more liquid high leveraged investments.
The direct nature of managed futures is a perfect correlation to any combination of investment, including hedge funds. Correlation is the foundation of Modern Portfolio Theory. Each investment within the composite performs independently from each other under variable economic and market circumstances.
How can you help me if I only want managed futures?
We do not claim to offer the skills that traditional advisors can provide. We can structure a decent managed futures strategy based on information obtained from a questionnaire. We do insist that your investment be considered within your entire investment portfolio.
What is the downside of a composite strategy?
We ask people to design their managed futures accounts as if the investment were lost. The process eliminates irrational fear. Expectations then evolve from fear into a positive belief increasing your success potential. If capital allocated to managed futures is lost, risk of the traditional strategy has not changed until market conditions or other parameters otherwise dictate. If we project potential investment returns five, 8 and 10 years; an appropriate balance can be defined.
Can these services be used for my retirement, trust or corporate accounts?
Every managed futures strategy can be used for all investment structures. Only tax consequences and account forms change.
How often do you change the allocation?
Managed futures are balanced using SafeMoneyMetrics Client Risk Management services. Time is not an exclusive consideration. Downside parameters and profit objectives are integrated with current market conditions. Individual advisor performance and growth within the multi-advisor strategy is also important. We also believe in profit distribution as a risk management strategy. If an advisor has to be replaced, we deal with it. The entire portfolio is monitored daily.
How do I get started?
Go to http://www.safemoneymetrics.com. Talk to your traditional advisor then you or they can contact us or any professional listed at the SafeMoneyMetrics IP Portal.