Managed Futures and the Fiscal Cliff

As the 24-hour news cycle finishes squeezing the last drops of interest from the election, the next “big story” was determined long ago: the fiscal cliff. It’s hard to read anything on the financial web without at least seeing a passing mention, if not a series of articles dedicated to the looming budget debate it represents. And we’re still 46 days away from the end of the year.

But in our corner of the financial world, the fiscal cliff holds a somewhat different meaning. Managed futures, as we often say, doesn’t care whether the markets are moving up or down – it’s the character of the move that determines whether CTAs prosper or muddle through. So regardless of whether we see a “grand compromise,” a temporary stopgap, or go past the deadline with no deal struck, managed futures may reap the benefits… or suffer the consequences.

Specifically, for the trend followers that make up the bulk of the industry (and who have been struggling lately), the worse-case scenario would be any outcome that leads to a short trend followed by a quick reversal. For example, if the deadline passes with no deal and all sorts of risk on markets take a dive, only to be resuscitated by a 13th-hour compromise that sends those markets shooting back into the green, trend followers could get caught in the whipsaw for losses.

However, if a deal passes over the next few weeks and the market loves it (or hates it), leading to a prolonged rise (or fall) in risk on/risk off markets… trend followers could get just the market conditions they’ve been wishing for.

Like everyone else, there’s little we can do other than anxiously watch events unfold. But unlike the “buy, hold, and hope” crowd, we at least feel a little better knowing that it isn’t a binary event for managed futures – who don’t need a resolution and higher stock market prices to succeed. And speaking of those buy and hold types, if you haven’t prepared your portfolio for the possibility of losses due to the fiscal cliff, don’t come complaining. This crisis has been about as high speed as the  Euro area problems were, meaning you’ve only had 6-12 months to prepare.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, 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.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, 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.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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