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What is a Managed Futures Fund?

A managed futures fund is an alternative asset created and maintained by a commodity trading advisor (CTA). The fund invests in commodity futures contracts.

How Does a Managed Futures Fund Work?

When you buy a managed futures fund, in essence you're hiring an expert to buy, sell and manage futures contracts on your behalf.

Managed futures funds tend to be uncorrelated to either the stock market or bond market. That means when the stock market zigs, managed futures funds tend to zag. That can make managed futures funds a good asset for diversifying a portfolio.

But because they tend to be illiquid and highly-leveraged, managed futures funds should be considered as speculative and somewhat risky.

Why Does a Managed Futures Fund Matter?

Managed futures funds aren't for the average investor, but if you like taking a little risk, they could be a great part of a diversified portfolio.

The most obvious obstacle to investing in managed futures funds is that you need to be an accredited investor. The 'accredited investor' label is used by the SEC to identify investors who are wealthy enough (and theoretically sophisticated enough) to invest in risky assets like managed futures funds.

Most managed futures funds also have account minimums, meaning that you must invest at least $250,000 to get your foot in the door.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.