Portfolios that include managed futures funds outperform those without them, according to a research paper released by the Alternative Investment Management Association and Société Générale.

According to the paper, interest in such funds from institutional investors has increased over the last few years, especially after they outperformed other asset vehicles after during the global financial crisis. Indeed, of all commodity trading advisors in the Societe Generale managed futures database, every one reported positive returns in 2008, with some increasing by more than 30 per cent over the year.

The sector is now nine times larger than in 2000, representing $340 billion in assets under management as of the end of 2016.

Read: Hedge fund allocations expected to decrease, despite rise in portfolio performance: survey

The paper also noted that the worst peak-to-trough decline in such funds since 2000 (a dip of 11.63 per cent) represented only a quarter of the scale of the largest plunge in global equities in the same period (53.65 per cent). The paper noted that the distinct lack of correlation with other asset classes has played a big part in the sector’s rise in popularity.

To use the funds to their best advantage, however, there are many criteria to consider, “especially as the number of strategies, exchanges and execution techniques mean no two [funds] are the same,” said Jack Inglis, chief executive officer of AIMA. “Increased inflows show that managed futures have a role to play when providing downside protection.”

Read:  The challenge of maintaining fixed-income returns as interest rates rise


Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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