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What are Managed Futures

Managed futures represent an industry comprised of professional money managers who manage client assets on a discretionary basis, using global futures and options markets as an investment medium. The manager makes all decisions on the clients' behalf through a revocable power of attorney.

Q. What are commodity trading advisors?
A. Commodity Trading Advisors, also known as CTAs, are a type of professional trader. They are typically registered with the National Futures Association and give advice regarding the buying and selling of futures or options contracts.

Q. Who should invest in managed futures?
A. Managed futures are not appropriate for everyone. A determination must be made as to a particular investor's suitability, at which point the investor will be provided with all of the necessary information to make sure he or she understands both the risks and possible rewards of this type of investing. Generally, in addition to having the required risk capital, an investor needs to have realistic expectations about returns on investment and tolerance to temporary drawdowns that inevitably will occur with managed futures products.

Q. Are there special risks associated with managed futures?
A. Yes. Managed futures investing carries specific risks. In particular, it is important to understand that the high degree of leverage often obtainable in commodity trading, can work against an investor as well as benefit an investor. The use of leverage can lead to large losses as well as gains. In some cases, managed futures accounts are also subject to substantial charges for management and advisory fees. There are many other risks to consider with trading in the commodity markets. Investors should carefully study the disclosure document of the CTA before making any investment in a managed futures product.

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Alternative investment products, including hedge funds and managed futures, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

Altegris, a FINRA and NFA member, offers various alternative investments, including hedge funds, futures funds and managed futures and commodities accounts, that may operate in commodities markets and foreign markets, among others. Altegris and/or its officers/partners may have a financial interest in such alternative investments. In working with clients, Altegris acts in its capacity as an SEC-registered Broker-Dealer and/or as a CFTC-registered Introducing Broker. Although Altegris may give advice that is incidental to its brokerage services, it is not an Investment Adviser. When acting as an Introducing Broker for individually managed accounts, Altegris 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. CTAs may also pay Altegris a portion of the fees they receive from accounts introduced to them by Altegris. When acting as a Broker-Dealer, Altegris enters into selling agreements with hedge funds and futures funds that it offers (including funds sponsored by affiliates), pursuant to which Altegris, with respect to the interests it sells, is paid a portion of the management and/or performance fees charged by the funds or their managers in respect of those interests. This enables Altegris to offer hedge funds, futures funds and individually managed accounts without charging fees above those charged by the CTAs, funds or managers.