Sign Up

Managed futures newsletter


Sign up now to receive our   free newsletter

Click here to gain free access. Build portfolios, set watchlists, and view more data and statistics.

Call us at 800.311.1145 to speak with one of our alternative investment specialists. We answer the phone in One Ring. Try It.Sign up to view performance on 100s of Managed Futures Programs, Trading Systems, and Managed Forex Programs. Sign up FREEWhat are Managed Futures? Is this the same as CTAs? How do I invest? Click here  to learn all of this and more on our extensive managed futures education pageHow to set watchlists? Build portfolios? Find correlations? and more. Click here to take a tour of our advanced toolsUse our most popular tool to create custom multi-program portfolios. Click here to get started today by signing up for FREE ACCESSClick below to learn how attain can assist your CTA in everything from back office creation and trade execution to finding a lawyer to create your D-DocNo upfront fees for managed futures funds is one of the unique benefits of a managed futures account at AttainOur alternative investment books list includes some of the most thought provoking and interesting books on alternative investmentsLearn how family offices outsource the managed futures research, due diligence, data collection, and ongoing monitoring of accounts to AttainWhat is a trading system? Who develops them, and how are they executed for client accounts? Our trading system education explains this and moreWe assist talented traders in getting their trading ideas into an automated trading system, do testing, marketing, and more

Diversify your IRA, 401k, Trust or other Tax Deferred Plan

July 16, 2007

 

We're about how its possible to invest 401(k), IRA, or Trust assets with managed futures accounts and trading systems, But I can already hear many readers asking why they should be thinking about diversifying their 401(k) accounts, with the stock market chugging along nicely.

And many investors won't understand the answer to why you should diversify is..... because the stock market is at all time highs. Taking some money out of stocks now is like leaving the casino when you're up. Nobody ever does it, because they are caught in the moment thinking they will keep making money - but everyone feels the pain and regret afterwards when the realize they should have walked away when they were up.

They say time heals all, but investors would be well served to keep time from healing the wounds suffered in the market sell off from 2000 through 2002. In fact these new all time highs we are at have only gained back all that was lost (over 7+ years). If you can remember the pain you felt when your portfolio was down significantly - then the choice to diversify should be obvious. Wouldn't it have been great to be the guy who cashed out and diversified his money at the peak of the Internet boom in March of 2000. Wouldn't it have been great to sell your house at the peak of the housing bubble?

The point is to buy low and sell high, right? Some people will argue you can buy high and sell higher - and that's true. But even the most devout bull has to see that this rally is getting a little long in the tooth. You have a housing market on the ropes, you have a looming mortgage backed securities crisis which could really sting, you have energy prices at historically high levels, and you have the driver of all this excess (cheap money and lots of liquidity) coming to an end as interest rates are rising.

You can trade CTAs and Systems through your 401(K) or IRA

With the very real possibility of a bear market right around the corner, it should come as very good news that you can trade non-correlated investments like CTAs and trading systems in your 401(K)/ IRA accounts through Attain.

Many investors largest pool of investment assets is locked up in retirement and trust vehicles that can't be touched for many years to come and unfortunately too many are very tied to the stock market, holding mutual funds, individual stocks, and some bonds. It only seems logical to diversify some of those long term assets into non stock market vehicles that can do well even if the stock market goes DOWN.

That is the real appeal of being able to invest these traditionally stock based accounts into managed futures. The ability to make money, or better yet - not lose it, if the stock market goes Down over the next 10+ years.

To trade CTAs or trading systems in your 401(k) or IRA account, your retirement funds must first beheld at an authorized futures based custodian or trust company which allows futures trading. If you do not already have an account with one of the authorized futures based custodian companies we can help you to establish one via a transfer or roll-over of funds. The trust company holds your funds, then distributes them on your behalf into your own customer segregated account within one of our clearing firms. Fees at the trust companies vary, but are generally in the range of about $200 per year for a custodial fee.

There any not any tax penalties for moving 401(k) or IRA funds into a futures trading account, due to the fact that the funds are still held by a custodian and only withdrawable at retirement. As far as the government is concerned, the investment activity in your account is treated exactly the same as if you were investing in Mutual funds or even holding on to cash. IRA funds should always be sent to a registered Trust or Custodian BEFORE trading begins, however, to insure investors don't incur any withdrawal penalties.

There can be restrictions on how much of your 401(k) or IRA assets you can invest in a futures trading account, depending on which clearing firm you wish to use. Of Attain Capital's two main clearing firms, PFG has no restrictions on the amount you can invest; while Man Financial allows for only 30% of your total retirement assets to be invested. As far as management and incentive fees for CTA accounts and lease fees for trading systems, all trading related expenses are still can be paid for directly out of the account with no penalty.

Why Diversify?

Understanding how diversification into alternative assets or strategies affects a portfolio's bottom line today and 10-30 years down the road is critical to one's financial well-being. For most investors the benefits of diversification are often overlooked in good times, but become painfully clear in bad times. Unfortunately, it seems we are now in those good times with a rising stock market where investors don't see the need to diversify, and unfortunately most investors won't think about diversifying until their conventional portfolios suffer greatly. How would 10 more years of sideways or down markets affect your retirement planning?

That being said we are not suggesting putting all of your retirement assets into Alternative strategies - as there is the risk of loss; but studies have shown that a healthy dose of exposure may actually increase returns while reducing risk.

For example an investor with $200,000 in retirement funds holding long the S&P 500 Index over the past 7 1/2 years has seen an average return of just 2.07% while experiencing a 44.73% drawdown! The same investment amount into the CTA program Zenith Resources would be worth just over $1,000,000, having returned 400% since January 2000 while experiencing a maximum month end drawdown of only 3.12%.

Past performance is not necessarily indicative of future results.
  YTD 12 Months 3 Years 5 Years 7.5 Years Max DD
Zenith Resources 4.47% 9.04% 45.30% 157.91% 399.53% 3.12%
S&P 500 6.96% 20.59% 39.12% 66.12% 15.54% 44.73%

As the above single example expresses; alternative investment vehicles, such as Zenith Resources, can provide protection as well as growth during bear markets in stocks and bonds due to their low correlation to the traditional investment vehicles.

The benefits of Alternative Investments on an investor's overall portfolio performance are further illustrated in the figures and tables below, comparing a traditional stock and bond portfolio to one containing a 25% allocation to an Attain portfolio.

The portfolio with a 25% allocation to an Attain Portfolio shifts the distribution of returns significantly to the right and shows less frequent losing months with smaller losses.

Figure 3 below show the average monthly loss is .61% smaller for portfolios containing an Attain Portfolio, which represents an average annualized bear market protection equal to 7.32%.

Furthermore the frequency of losing months drops from 33 to 20 over the period and the average profit for all months is 9.12% higher on an annualized basis for the portfolio containing an Attain Portfolio.

The number of pension funds, endowments, and high net worth investors investors moving in this direction has been increasing year over year before getting started below are some common investor questions.

Now that you know you have the ability to diversify your retirement assets is out there let us help you find the right model for your account... you can e-mail any one of our representatives or feel free to e-mail me directly at jse@attaincapital.com with any specific questions you have.

IMPORTANT RISK DISCLOSURE


No Yes Was this article particularly interesting or helpful to you?

No Forward this email to a friend who might find it useful.

Not on our mailing list? Sign up now to receive this weekly newsletter.

Feature | Week In Review: US stock indices post new All time highs

***Overview***

The great bull market of 2007 continued higher last week as traders sent the Dow to a new record high. A very impressive retail sales report plus impressive earnings from retail giant Wal-Mart were the main catalysts as traders like to see money being spent in the economy. Dow futures led the charge, gaining +1.93% last week, followed closely by NASDAQ futures which gained +1.88% and SP futures were up +1.14%. Smallcaps didn't rally quite as much however with SP Midcap futures gaining +0.69% and Russell 2000 futures finished the week unchanged.

The US Dollar continued to weaken against the Euro and Yen last week. The US Dollar index was down -1.07% while the Euro was up +1.20% and the Yen gained +1.01%.

In commodity trading grains continue to be the most volatile sector on a week by week basis with Soybeans gaining +5.89%, Corn up +4.69%, and Wheat rallying +1.76% higher. The softs were also moving with Cotton gaining +5.80% and Sugar rallying +3.46%. Energies remain mixed with Crude Oil futures (+1.34%), Natural Gas (+3.23%), and Heating Oil (+0.59%) moving higher while RBOB (-3.67%) gas fell.

Finally other markets on the move include Silver which was up +2.77%, Gold gained +1.91%, Platinum rallied +1.25% and Lean Hogs were up big at +6.30%.

***Commodity Trading Advisors (CTAs)***

Following the big index market pop last week, many investors were looking to their statements for an update. There were winners and losers; as there typically are, however in this case there were very few losers to report.

Broadly speaking, Index option sellers had a good week as most ere positioned on the Put side of the market with short Puts well below the market. The majority of any remaining option value quickly evaporated following the run up last week. Another positive note for option sellers is that Index option expiration is this Friday. The above benefited the likes of Zenith Resources, Diamond Capital, BC Capital, Ascendant, and Argus but moved slightly against Zephyr who began moving into several August positions.

Outside of the stock index market, Dighton investors are happily cheering the Cotton, Coffee, and Sugar markets higher as the strategy is currently trading on new equity highs. Dighton actually took partial profits on its Cotton position, which looked like a remote possibility at best just a few short months ago. You have to hand it to them for sticking with their convictions and riding that market back to the upside.

Meanwhile, FCI investors would have preferred to see Cotton trade lower last week, as several October call options saw rapid increases in value as the underlying price headed into the money. One thing we really like about FCI, however, is that an adverse move against their positions in a single market doesn't equate to huge hit on performance. The losing trade will cost investors about 2%, only. Compare that with the 30% and 40% losses seen on short index option sellers like World Capital in April when their options went into the money, and you can see why we're so high on FCI (their diversification means a single position can't severely hurt the portfolio)

Finally, spread trading managers have seen quite a bit of volatility in the grain and livestock markets recently that will likely lead to several new position trading opportunities.Stay tuned as summer markets have a tendency to be pretty exciting for those commodities.

To view each CTA's June performance, here is the link: http://www.attainaccess.com/cta

***Day & Swing Trading***

Global equity markets came roaring back in the second half of last week after drifting lower on Monday and Tuesday. Wednesday was the turning point for stocks, but the bulk of the gains came on Thursday with the Dow adding 283 points or ~ 2 %. Nearly every day trading system entered long on Thursday and most were able to parlay those gains into profitable weeks. Swing system results weren't as favorable, with many systems losing open trade equity on their short trades.

Compass SP was the top performing system last week with gains of +$2,780.77 on a trio of trades. The system had winning short and long trades on Tuesday and Thursday respectively, but then gave back a small portion of those profits on a short trade from Friday. Rayo Plus Dax had three trades for the week totaling +$1,569.99. BetaCon 4/ 1 ESX followed a similar trading pattern and made +$1,183.02 for the week. Phi Plus Dax also capitalized on the volatility in European equity markets and made +$900.34 for the week.

Elsewhere, OPXP eRL profited +$730 on two trades despite the generally bullish conditions (system is short only). Waugh eRL had one long trade on Thursday for a profit of +$300 for the week. Impetus eRL traded twice and made +$110.

Only a small portion of the swing systems were able to stay above water last week. Targets eRL was the top performing swing system with profits of +$1,880. Tzar NQ reversed long in the NQ for a small loss but then tacked on open profits for a net gain of +$1,635 for the week. Targets eMD traded less than its eRL counter-part but managed to profit +$1,130.

On the losing side-Tzar eRL and Tzar ES were both short and saw gains from early in the week wiped out, and then some. The systems lost -$30 and -$875 respectively. SeasonalST eRL and ES both had uneventful weeks with a gain of +$20 and loss of -$105 respectively. Mesa Notes reversed long for a small loss on the closed out trade and a net loss of -$412.50 for the week. Adaptive US and EUR lost -$1,774.54 and -$2,586.42 respectively.

 

***Long Term***

Moderate gains were seen in rates futures during the past week as sector support emanated on continued uneasiness from the sub-prime mortgage fiasco along with weaker retail sales report. Economic releases for the week ahead are fairly heavy midweek with a tilt toward inflationary gauges which could keep the market edgy as it continues to consolidate in the recent 2 point range looking for guidance. Currently long term trend followers remain in a down bias as Aberration is short the Sept. Bund currently making +3,070.00 Euros (open trade) as well as a short Sept. TY position with a current gains of $1421.80 (open trade).

The U.S. dollar and Japanese Yen again lost ground to the major European currencies during the past week as higher yields in Europe coupled with weaker economic data in the U.S. sparked markets to levels not seen in 4+ years. The Japanese Yen continued to find pressure from the stagnant Japanese economy, although there have been signs that a turnaround may be nearing. Long term trend followers remain mostly on the sidelines due to choppiness and volatile swings, although Aberration did get short the DXU currently showing a $110.00 gain (open trade).

Sector wide gains were seen in most soft commodities last week as positive long term supply/demand situations and a weaker U.S. dollar sparked underlying support. The grain sector saw soybeans score new 2+ year highs on reduced plantings and wheat move back near 8+ year highs on news of crop problems world wide and continued ideas of very tight world supplies. Aberration is currently long BOZ making +$3080.00 (open trade), long CTZ making $1790.00 (open trade), long KWU making $2587.00(open trade) and short CZ losing -$925.00 (open trade).

IMPORTANT RISK DISCLOSURE
Futures based investments are often complex and can carry the risk of substantial losses. They are intended for sophisticated investors and are not suitable for everyone. The ability to withstand losses and to adhere to a particular trading program in spite of trading losses are material points which can adversely affect investor returns.

Past performance is not necessarily indicative of future results. The performance data for the various Commodity Trading Advisor ("CTA") and Managed Forex programs listed above are compiled from various sources, including Barclay Hedge, Attain Capital Management, LLC's ("Attain") own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

The dollar based performance data for the various trading systems listed above represent the actual profits and losses achieved on a single contract basis in client accounts, and are inclusive of a $50 per round turn commission ($30 per e-mini contracts). Except where noted, the gains/losses are for closed out trades. The actual percentage gains/losses experienced by investors will vary depending on many factors, including, but not limited to: starting account balances, market behavior, the duration and extent of investor's participation (whether or not all signals are taken) in the specified system and money management techniques. Because of this, actual percentage gains/losses experienced by investors may be materially different than the percentage gains/losses as presented on this website.

Please read carefully the CFTC required disclaimer regarding hypothetical results below.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.