Managed futures are one of many tools in the price risk management toolbox. Managed futures programs rely on registered Commodity Trading Advisors (CTA’s) to manage futures and options investments on the client’s behalf. For investors, a managed futures program is often a diversification from conventional stock and bond assets, seeking higher returns while recognizing higher risks due to the leveraged nature of commodity futures markets. The CTA is expected to manage those risks.
For commodity producers, the price risks are not optional, they already exist in the underlying product. Hedging via futures and options is a way to pass some of that price risk to others. However, in many cases the producer is already fully employed on the production side of the operation and may not have either the time nor the skills to successfully manage a hedging account. A managed hedging account from Ag Hedging Management can assist with these issues. Some producers also use managed futures as part of a portfolio marketing approach, doing some of the pricing themselves and allocating a portion of the risk management to the professional advisor.
For more information on managed futures in general, check out these Internet resources. Please be advised that these links are not controlled by Ag Hedging Management and we cannot be responsible for any errors or omissions in the content:
https://www.cmegroup.com/education/courses/managed-futures/what-are-managed-futures.html
https://www.cmegroup.com/education/courses/managed-futures.html
https://www.investopedia.com/articles/optioninvestor/05/070605.asp