Managed Futures

What are Managed Futures?

Investment Universe

For more than 30 years, Managed Futures have helped investors diversify their portfolios, while seeking alternatives to traditional assets classes. The industry holds about $320 Billion in assets, and continues to grow as more investors transition portions of their portfolio into this segment.

Managed Futures are a natural choice for diversification. Our Managed Futures systems provide investors flexible investment options, that are traded on the global financial and commodity markets. As of today, we offer investment options in Equities and Commodities.

Because of their inherent diversity, Managed Futures tend to be weakly or inversely correlated with traditional markets, making them ideal investments to round out a well-constructed portfolio. They can yield profit regardless of market conditions and other asset performance. Adding Managed Futures to a portfolio of traditional investments provides the potential for higher returns with lower overall risk. They give investors the ability to go long – buy futures positions – in order to profit from rising markets or go short – selling futures positions – in order to profit from falling markets.

Our Managed Futures portfolio is developed by traders with more than 20 years of experience trading the financial markets. Until recently, Managed Futures have been suitable for the few and experienced; the fundamental concept behind our systems is to eventually make them available to everyone who wants to partake in the markets. We offer full management of the system, with complete transparency, and minimum account sizes starting at $100.000.

As a client in our Managed Futures offering, you will have daily access to account statements, details of all positions and complete disclosure. Since these accounts are settled daily, investors can monitor and track daily account activities and their equity curve. These investments are generally highly liquid; investors maintain tight control of accounts and may withdraw or transfer funds on a monthly basis. All investors can adjust their exposure and risk allocation in the Managed Futures systems.

The average return on the S&P500 since inception is 9.8% per annum including dividend. This assumes a long-only passive strategy. However, with a more efficient system, trading both long and short such with futures, and selective risk allocation, you can create excess returns far greater than this average with including Managed Futures in your portfolio.

You can read more about the process of becoming a client on the Client Onboarding section.

When cirital events occur

Being dynamic to the markets

Financial markets are always developing and changing their behavior as a response to world events. In some periods, the markets will experience a relatively one-directional movement, with the same general pattern of movement for a very long time. In other periods, it will be changing rapidly. For perspective, from 1999-2019, the stock market (as defined by the S&P 500) moved on average -1% and +1% a day, for approximately 70% of trading days. About 20% of the time, the market moved -2% and +2%. 10% of the time, -3% and +3%.

In March 2020, an 11-year long bull market ended, markets crashed and fell more than 20% and entered a bear market territory with high volatility and strong directional movements. This increased volatility is not an abnormal event in such an environment, as the world is now centered around the corona-crisis. Central banks all over the world are pouring money into the markets preventing the free market voices from moving the markets. Not only have we gone from an historical long bull market, we have entered a brand-new era of market dynamic.

As a long-only investor in traditional assets, these are changes and information you will have to consider and act upon – whether to buy or sell, which is even harder under such unprecedented times, with current market circumstances. For our Managed Futures systems, it is different.

Our Managed Futures systems always take an active approach with several tight and short-term trades, avoiding a lot of the holding risk. An extremely important factor in normal markets, but even more so when changes are as drastic as now. With fixed risk parameters always in place for any change in dynamic, we can focus on developing and adjusting our systems to the current market behavior. With this approach, we are making the systems able to continue their strong performance during changing market dynamics, creating strong absolute returns over time for our investors without taking on more risk. The risk is always the same regardless of the situation, unless you choose to change it.

During this recent massive change in both market direction and behavior, we have proven the dynamic approach of our systems to work with continued high performance and strong absolute returns. Our Crude Oil system has even shown an extreme outperformance due to the increased market volatility. Our Managed Futures systems can and have so far, continuously outperformed traditional assets and delivered high absolute returns in both the historical long bull market and during this corona-crisis.

When cirital events occur

Why choose us for Managed Futures?

With a flat or falling market, it can be difficult for investors in traditional markets with a long-only passive strategy to generate strong absolute returns. This is true even with Managed Futures. Our added edge allows us to stand out from the competition.

Through statistical and mathematical modelling, data visualization, pattern recognition and machine learning techniques, we tease out subtle predictive signals that form our investment systems. This makes us able to take an active approach to the markets 24/5, making several tight and short term trades a day, reducing the risk significantly, providing exceptional liquidity and generating strong absolute returns over time.

We understand that each client is different, so we manage futures through a managed account structure, giving each client a tailor-made portfolio. Together with the client we determine their needs, goals and risk preferences. This creates the foundation to their Managed Futures investment, and a guideline for us to navigate accordingly.

In order to maximize total return, we have selected the most liquid and suitably volatile futures to build our portfolio of systems. A selection of these systems, together with adjusted exposure, creates the client’s portfolio in their account. Each client can individually choose which systems and exposure to include.

The minimum account size is $100.000, and no management fees. We only charge performance fees, calculated on a high monthly watermark, net of commissions and trading fees.

Tailor-made portfolios.

                      

Strict risk control.

                      

No management fee, only a high watermark performance fee.

                      

Account opening minimum $100.000

                      

Retail to high-net worth to institutional investors are welcome as clients.

Example $100.000 Account Size

NASDAQ System

                      

  • Average performance is 15% per month = $15.000

  • Average number of trades per day: 2,2

  • Average duration per trade: 92 minutes CONCENTRATED time exposure to the markets. Active 13% oF trading hours, reducing the risk significantly.

  • 1% Risk per trade = $1000

  • STATISTICALLY worst-case scenario with 80% win rate is 7 losing trades in a row = 7% drawdown = $7000 loss.

Risk disclosure: Trading Futures and Options on Futures involves substantial risk of loss and is not suitable for all investors. Opinions, market data, and recommendations are subject to change without notice. Past performance is not indicative of future results. We are a Swiss Asset Manager regulated by VQF. Our membership can be verified by searching for “Delta1trader” on the FINMA website.

How it works – being a Managed Futures client

How it works – Managed account structure

How it works – Managed Futures trading process

RISK MANAGEMENT

As outlined in the “What is Managed Futures?” section, Managed Futures have a strong ability to yield profits regardless of the movement of the stock market and other investments; providing potential for generating higher returns with lower risk to your portfolio. However, as an alternative asset class, it still has risk onto itself.

In order to properly manage that risk, we use both historical trading data for each system and probability calculations to summarize total risk for clients. The probability calculation is based on the system’s win rate. We always adjust risk according to the clients’ preferences.

One of our risk reducing measures is that our exposure to the markets is only a small precentage of its opening hours. We are only exposed in the short time frame that our systems find a good enough trade. This excludes us from large negative movements to the markets and the trading positions.

Click on chart to enlarge.

Probability-NEW

Click on chart to enlarge.

RISK PROFILE

STANDARD LEVERAGE

1% max risk, per trade of the account balance.

15% max drawdown of account balance according to the probability chart.

 

MEDIUM LEVERAGE

2% max risk, per trade of the account balance.

30% max drawdown of account balance according to the probability chart.

 

AGGRESSIVE LEVERAGE

4% max risk, per trade of the account balance.

40% max drawdown of account balance according to the probability chart.