A mutual fund is managed by a portfolio manager of capital known as CFA and a bond fund is managed by a portfolio manager fixed income is also a CFA. Their exists a third type of portfolio manager and is responsible for managing a fund that invests in products such as currency, carbon emissions, precious metals, agricultural products and other one. These portfolio managers called CTA CTA and manage funds sometimes known as a managed futures fund.
Despite the obvious, every style of investment has its own unique characteristics. For example, a traditional equity investor makes money only when the stock is rising. They lose money in a bear market or a bear. Wouldn 't be great to win regardless of market direction left. Well, that's exactly what happens in a background of CTA. The CTA can buy or sell at random. We call this being "long" or "short". At the time, you 're betting that the market goes up and when short, they' re betting on the market is falling. A CTA makes money no matter what direction prices are in charge.
Now that you know the basics, let's see why CTA funds have outperformed equity and bond funds. Since September 2008, the Wall Street fiasco induced sub-prime mortgage has caused stock prices plummet. If you had a fund equity investment or portfolio of shares in your account, you lose money. In fact, since September 1, 2008 the Dow Jones Industrial Average lost 20.36 percent. According to the database managed futures CTA, the CTA half Fund YTD ROR (rate of return) to June 2009 is 2.14 percent. That huge difference SA 'of 22.50 percent. These funds are definitely worth checking out.
An important advantage is the ability to negotiate the underlying commodity. Why buy a company that 's involved in the extraction of oil when you can buy the same oil. The reason the stock market investment is difficult, is that many different factors that come into play. It is the management capacity, economic pressure, competitive pressure, union demands, changing consumer habits and a number of other factors that determine the profitability of a company.
A fund of CTA has none of these issues to deal with. Investors who buy aluminum or high-grade copper in the New York Mercantile Exchange will only be affected by problems of supply and demand. During periods of economic growth, prices rise and during periods of recession, prices fall. Thus, while the venture capital fund is sitting on the sidelines waiting for a market re-united, the CTA fund is profitable trade in a bear market.
It would be remiss not to discuss the use of leverage. Unlike a venture capital fund, a fund uses leverage CTA. For example, to purchase $ 100,000 costs only $ 350 Canadian to the CTA. So when the dollar rises from 91 cents to 92 cents, the fund makes a profit of U.S. $ 1,000. That's a 186 percent gain. If you look at this from another angle could become clear. To buy 1,000 barrels of crude oil at U.S. $ 60 per barrel would cost U.S. $ 60,000 for consumers in cash. The NYMEX charges a deposit, we call this range of U.S. $ 6,000. In case of crude oil increased to $ 65, the benefit is $ 5,000 or 83 percent profit.
Of course, the use of leverage can be dangerous since the losses can increase rapidly. In case of crude oil have fallen to $ 55 rather than increase, a loss of $ 5,000 which resulted. Of course, CTA funds are not the only funds to use leverage. Many hedge funds use leverage capital routinely and in terms of its overall investment objective of a balanced mix of assets will determine the percentage of your portfolio allocated to the fund.
There are many types to choose from CTA funds. Agriculture funds, energy funds, currency funds, index funds, bond funds and greenhouse gases or global warming funds. Choose the one that 's right, but when the balance of your investment portfolio don' t on the appearance of this important sector to appropriate asset allocation and complete.
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