Adding Alternatives: Enhanced Portfolio Positioning for Risks and Opportunities via Integration of Managed Futures into Equity Portfolios

KEY TAKEAWAYS

  • Managed futures products usually implement trading
    methods that involve going long or short in futures and
    commodities diversified across global futures markets
    based on market trends.
  • The 50/30/20 allocation model (50% U.S. Equities, 30%
    Bonds and 20% Managed Futures) offers a simple
    approach to integrating managed futures exposure into
    a portfolio: take 10% from both equities and bonds to
    allocate to managed futures.
  • Financial Advisors and investors should consider the
    use of Managed Futures products, to strive to provide
    an uncorrelated return stream and reduce the impact of
    drawdowns.
  • Rational/NuWave Enhanced Market Opportunity Fund
    (NUXIX) seeks long-term capital appreciation and
    superior risk-adjusted returns by combining an actively
    managed U.S. equities component and a broadly
    diversified managed futures component, providing both
    long and short exposures across a wide variety of
    financial and commodity markets.

Adding Alternatives:
Enhanced Portfolio Positioning for Risks and Opportunities via Integration of Managed Futures into Equity Portfolios

With the bull market in its ninth year, many investors are faced with the challenge of continuing to improve their investment portfolio returns, while at the same time lowering risk and reducing the impact of potential drawdowns. In today’s global markets, the traditional asset allocation mix of long-only stocks and bonds may not adequately position investors’ portfolios for risks and growth opportunities.

While no one can predict when the next market drawdown will occur, Financial Advisors and investors should consider the use of Managed Futures products, to strive to provide an uncorrelated return stream and reduce the impact of drawdowns. Historically, implementing managed futures exposure into a portfolio may have resulted in higher returns with reduced drawdowns and lower volatility. Even a 10% allocation to managed futures exposure would have significantly improved portfolio performance.

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8161-NLD-9/28/2018

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