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Are Managed Futures a Suitable Client Marketing Tool?

Are Managed Futures a Suitable Client Marketing Tool?

managing_table2An interesting thread is forming on our forum. A new wirehouse advisor asks our Advisor Forum audience:

"Does anyone successfully market managed futures? From what I understand the commission on these is very strong, and many advisors don't always put these in a clients portfolios. Based on poor stock market returns the last decade and the strong performance of many managed futures funds, it would seem there would be a strong case to lead with these as a small percentage of a clients portfolio combined with the good payout. Any feedback is appreciated..."

There was one response was, "Prediction.....If you lead with managed futures, you will fail. Seriously IMO it is a bad idea. I haven't seen any of them that the performance warrants the fees charged."

My response was: "Yes, managed futures are expensive for the client and can be --- not always, but very often --- volatile as hell. Better to get commodity exposure via ETFs. We have done lots of stories on various ETFs, including gold, "soft" commodities (wheat, sugar and etc.) as well as oil and the obvious ones. Indeed, ETFs (and ETNs) are a great, cheap way to get exposure to commodities--- and some you don't have to worry about the problem with futures (i.e. contango).

The best way to play gold, gold miners or ETF of the bullion? Better to go SPDR Gold Shares Trust (NYSE Arca: GLD). See our story from October. For more, simply do a search on our website of our long-time contributing editor, Brad Zigler. He used to work inside the belly of the beast (Barclays) and is an expert on exchange-trade products and commodity strategies."

Here is a primer on managed futures that we published last fall.

What say you? What are the best, cheapest managed futures out there? What managed futures firms should I be writing about?

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