A number of factors have been responsible for the growth in managed futures trading:

• The stock markets in the U.S. experienced the first consecutive three-year decline in 60 years, and still have not surpassed the highs made in 1999. Because of the disappointing equity returns and a current economic environment which we believe to be favorable to CTAs, investors are drawing their attention again to Managed Futures.
   

• Sophisticated investors have sought more effective methods of diversification. A number of studies indicate a portfolio including managed futures may yield more stable returns over a period of time relative to portfolios including only stocks and bonds.
   

• The enormous expansion of futures to encompass stock indexes, debt instruments, currencies, and options as well as conventional commodities has created new categories of profit opportunities. The global nature of today's futures markets also has expanded the scope of investment possibilities.
   

• Studies conducted by the Chicago Mercantile Exchange (CME) indicated that Managed Futures accounts may be more profitable on the average than accounts that individuals trade on their own.

In the last 20 years, investor participation in the world's stock and bond markets has dramatically increased in large part due to the growth of mutual funds, individually managed stock accounts and trading technologies. Similarly, investor participation in alternative investments has increased through investor participation in futures markets, which include managed futures accounts.

According to The Barclay Group, money under management during the 4th quarter 2004 was $131.9 billion, a 12.06% increase from the previous quarter. This represents a 52.49% increase in assets since the beginning of 2004.

Next Article: Benefits of Managed Futures