Types of Investment Opportunities

According to the Barclay Trading Group, Ltd. in 2006, it was estimated that over $170 billion was under management by futures trading advisors worldwide. Currently, there are three primary categories of managed futures.

Individual Accounts are usually opened by institutional investors or high net worth individuals. These funds usually require a substantial capital investment so that the advisor can diversify trading among a variety of market positions. An individual account enables institutional investors to customize accounts to their specifications. For example, certain markets may be emphasized or excluded. Contract terms may include specific termination language and financial management requirements.

Private Pools commingle money from several investors, usually into a limited partnership. Most of these pools have minimum investments ranging from approximately $25,000 to $250,000. These futures partnerships usually allow for admission-redemption on a monthly or quarterly basis. The main advantage of private pools is the economy of scale that can be achieved for middle-sized investors. A pool also may be structured with multiple trading advisors with different trading approaches, providing the investor with maximum diversification. Because of lower administrative and marketing costs, private pools have historically performed better than public funds.

Public Funds or Pools provide a way for small investors to participate in an investment vehicle usually reserved for large investors.