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e Mortgage EA fails to produce results remotely close to those promised on the fancy web page which sold them the EA.
4. They try mirror-trading… and discover that the trader they are “copying” opens an impossible number of positions at once, or carries losing trades to such an extent that the investor gets margined out. Or that from the moment they sign on, the performance is disappointing.
5. They try a “not completely honest” managed account service. They don’t know that the manager operated under a different name in the past, and after losing everyone’s money, closed shop, then re-opened under a different name, conveniently showing track records which skip over, or inaccurately reflect past results. They may even publish audited results. But what has been audited? By definition a managed account belongs to a single entity. How does the auditor know which account(s) he’s auditing? What rules are followed? (There are established standards for auditing managed accounts). An unregulated manager has too many ways to show you only what is best for the manager. Don’t put your money with one!
6. The finally turn their account over to a regulated professional such as a CTA. At last, the investors have learned what to avoid. And, what to look for: an account manager who is regulated, who is subject to random audits by a third party, who has a great deal to lose if (s)he is caught misprepresenting (or hiding) a track record. All US regulated managers must follow strict, uniform guidelines which allows investors to compare “apples to apples” when looking at disclosure documents. If you want to open a Hallitun tilin, do so with a regulated professional!
The Managed Futures Account is somewhat more mainstream than the managed forex account, primarily because futures are traded on exchanges, whereas there is no exchange for spot forex trading. Their history is longer, and you’ll find more CTAs who specialize in managed futures than those who favor managed forex. The key features of the futures managed account are:
1. Diversification. By allocating one’s portfolio across a number of asset classes, risk is diminished, and therefore on the long term, returns are higher. If you had invested $100,000 in the S&P Index in 1990, it would have grown to about $216,000 in 2010. Had you invested $100,000 in Managed Futures, your account would have grown to over $600,000. In other words three times higher.
2. You are up when the market is down. Traditionally, Managed Futures earn money when the stock market declines. This is because Managed Futures advisors can employ strategies to take advantage of declining prices. These strategies include short-selling, and specific options techniques.
3. Due to regulation and standardization within the industry, Managed Futures are considered institutional-grade investments. Many pension funds, for example, invest in Managed Futures in order to beef up returns and stabilize risk.
4. Any kind of investment which is traded electronically is subject to system failure. The largest clearing exchange in the world, CME , employs robust, time-tested practices so that it operates smoothly during turbulent markets. CME has never defaulted in its 100 year + history.
The typical Futures Managed Account has offered quite consistent returns for over thirty years. For those who have the resources to invest, this is an investment worth considering.
Most Hallitun tilin providers structure their investments for institutional investors. Investment minimums are commonly $1 million and more. However some managers offer accounts for retail investors. The Review is aware of some CTAs who have allowed investments as low as $3,000. Such small minimums demand extreme caution, both by the investor and the manager.
Retail investors should look carefully and honestly at their own finances before committing to a managed account. Due to the fact that most managed account programs trade volatile assets such as forex and futures, account balances will reflect that volatility, often magnified three or tenfold due to the leverage offered by the broker.
For this reason it is absolutely imperative that retail investors ONLY work with registered, regulated professionals. In the US, this means that your account manager must be registered with the CFTC and members of the NFA. In Western Europe this means registration with the F.S.A. or POLYREG.
Retail investors should never invest with money managers who aren’t members of these bodies. So-called “managed accounts” can still be found on the internet, most of them promising extraordinarily high returns, with small minimum investments. These are the ones to stay away from, no matter how slick the site may look. The Review will publish a list of non-regulated account managers. We advise to stay away from these firms.
“Our mission is to provide accurate, important and educational information on managed account providers.”
The principal purpose of The Managed Account Review is to provide sober, honest educational articles covering alternative investments. If you have a question which isn’t answered in our pages, you can ask us and we’ll publish your answer (with editorial discretion).
Impartial Analysis We do not promote our own programs or any specific managed account. We publish the rankings and reviews of managed account providers and programs.
1The method of charting used in the analysis at the top of this page is known as the Value-Added Monthly Index (VAMI). It allows investors to make a “direct” comparison of one type of asset to another. The VAMI is quite useful when comparing a Hallitun tilin to any standard index.