Announcing Managed Futures with Foss Mountain Capital: Help for High Net Worth Investors to Position Their Investment Portfolios in Today's Volatile Markets

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Foss Mountain Capital breaks down the details of a managed futures account and outlines the benefits therein. They also explain the due diligence process of manager search and selection.

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Foss Mountain Capital helps high net worth investors structure their portfolios for long term success. The term managed futures describes an industry comprised of professional money managers known as Commodity Trading Advisors (CTAs). These professional managers manage client assets on a discretionary basis using the global futures markets as their investment universe.

Bernard Braudis, Managing Member of Foss Mountain Capital, explains that, "a managed futures separate account is similar to an 'open architecture' manager platform administrated by a brokerage or private bank. After completing a client agreement, the CTA will operate under a limited power of attorney authorizing them to make trading decisions in accordance with their specific investment strategy."

Client funds are held by a third party custodian and titled in the client's name. The client maintains account ownership and has sole authority over account deposits and withdrawals. The custodian communicates with the CTA to execute trades and is responsible for client reporting including transaction and monthly statements. The custodian's role is similar to the role Charles Schwab or Fidelity Investments plays as custodian for a Registered Investment Advisor or independent financial planning firm overseeing traditional investments. The Foss Mountain Capital site offers a managed futures industry structure diagram.

What are the benefits of managed futures?

By their very nature, managed futures provide a diversified investment opportunity. Commodity Trading Advisors (CTAs) can participate in more than 150 global markets: from grains and gold to currencies and stock indices.

  • Potential to lower overall portfolio risk
  • Opportunity to enhance overall portfolio returns
  • Transparency and liquidity

For a comprehensive overview of the benefits of managed futures, please view the details online.

Managed futures as an industry traces its roots back thirty years when the futures industry was dominated by agricultural markets. Futures trading was referred to as "commodity trading" and the name Commodity Trading Advisor was applied to professional money managers who managed client funds. Fast forward thirty years plus and the term Commodity Trading Advisor is a bit of a misnomer as benchmark futures and options products cover all major asset classes including interest rates, equities, FX, commodities and alternative investments such as weather and real estate.

What is the due diligence process for choosing Commodity Trading Advisors?

The due diligence process typically begins with an analysis of returns and drawdowns and is a balancing act of seeking the greatest return with the least amount of risk. Statistical analysis includes a review of the manager's return distribution, historical drawdowns, margin usage, risk/reward ratios, fees and correlation studies. Qualitative analysis includes a review of management's background, organizational structure, trading strategy, potential conflicts of interest and much more. Foss Mountain Capital offers a comprehensive overview of the due diligence process.

The goal of most CTAs is to manage their equity by managing their losses, putting them in position to capitalize on trending markets when they occur. Profitability may not happen over one month or one quarter, but rather over a longer time horizon. Investing in CTAs should not cause major anxiety but rather the potential to increase wealth with a reasonable amount of risk. Please note, there is a risk of loss in trading commodity futures and options.

Many alternative investments are available only to investors who can commit substantial assets under a lock up period. Managed futures are the exception, with high-quality managers available at low minimums. Braudis points out that, "a question to ask yourself is, 'What am I doing to potentially combat the under-performance of my more traditional investments?'"

For information on the customized managed futures absolute return commodity strategies, please visit Foss Mountain Capital.

About Bernard Braudis and Foss Mountain Capital:
Bernard Braudis is a Managing Member of Foss Mountain Capital, LLC, a wealth management firm specializing in absolute return commodity strategies. Foss Mountain Capital LLC is a member of the National Futures Association (NFA) and registered with the Commodity Futures Trading Commission (CFTC).

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