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Managed Futures
Managed Futures

The ability of futures to enhance the returns of traditional investments has been documented in a study conducted by Goldman Sachs. Covering a 25-year period, the study concluded that by "allocating only 10% of a securities portfolio to commodities, investors can vastly improve their performance." Goldman Sachs' conclusion, concerning the value of commodities, was supported by another study published by the Chicago Mercantile Exchange, one of the world's preeminent futures exchanges. According to the CME study, "Portfolios with as much as 20% of assets in managed futures yielded up to 50% more than a portfolio of stocks and bonds alone."

The Chicago Board of Trade's booklet, Managed Futures, Portfolio Diversification Opportunities, shows a portfolio with the greatest risk and least returns comprised of 55% stocks, 45% bonds, and 0% managed futures while a portfolio exhibiting the greatest returns and least risk, comprised 45% stocks, 35% bonds, and 20% managed futures.


HYPOTHETCIAL EXAMPLES

The following hypothetical examples should prove quite helpful in better understanding how a relatively small investment in managed futures can increase overall portfolio performance:
Let's assume your total portfolio is $250,000 and you invest 80% in stocks and bonds ($200,000) and 20% in managed futures ($50,000). Let's assume at the end of the year you realize a 5% return on your stocks and bonds and a 25% return on managed futures. The result would be as follows:

$250,000 Portfolio % of Portfolio Return
Stocks & Bonds $200,000 80% 5% Profit $10,000
Managed Futures $ 50,000 20% 25% Profit $12,500
Total Profit $22,500
Now let's assume you earn 10% on the 80% of your portfolio invested in stocks and bonds, but lose 25% in managed futures. The results would be as follows:

$250,000 Portfolio % of Portfolio Return
Stocks & Bonds $200,000 80% 10% Profit $20,000
Managed Futures $ 50,000 20% 25% Loss ($12,500)
Total Profit $ 7,500

NOTE:

No matter what the size of your portfolio, 80% invested in stocks and bonds and 20% invested in managed futures, with the same percentage returns, would produce the same percentage results in our hypothetical examples.
Important Disclaimer: The above hypothetical examples are strictly for illustration purposes only, to help you better understand the potential impact of portfolio diversification.

In no way are the examples to be construed as the returns you might receive in stocks and commodities. Of course, in actual investing, your results can be better or worse. The risk of loss exists in futures trading.

There is a risk of loss in futures trading. You could potentially lose more than your initial investment.

With practically a zero correlation with stocks, one of the most attractive features of managed futures is its ability to add profound diversification to an overall investment portfolio.

You can see, in these hypothetical examples, by investing only 20% of your portfolio in futures, if you were to earn 25%, it would outperform 80% of your portfolio invested in stocks and bonds if the stocks and bonds earned 5%.

These hypothetical examples both show a positive result. The risk associated with futures trading could potentially result in a loss greater than the initial investment, and the overall result could be negative.

The above hypothetical examples are strictly for illustration purposes only, to help you better understand the impact of portfolio diversification. In no way are the examples to be constructed as the returns you might receive in stocks and commodities. Of course, in actual investing, your results could be better or worse.

You can also see that a 25% loss in futures would still leave you with a net profit of $7,500 if your stock and bond allocation returned 10%.

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Experienced
Clients Testimonials
This is an experience of a certain client. Your experience may vary.

The service I receive from your staff at Optimus Futures is exceptional. Being new to trading futures, I needed extra guidence and attention. Even though I have a small account, Chad has been very helpfull and always willing to explain any detail. I have great confidence in your staff. Everyone at Optimuns treats me with the same courtesy and attention that would be expected by any big investor.

Antonio S
Arlington, TX

I really do appreciate what you, Chad, and Jennifer do for me as my broker.

The thing I like most about Optimus Trading is the way that Matt and Chad interact with me as a trader. Their assumption is always that I know what I'm doing. When they present an alternative suggestion they do so in a way that gives me additional information so that I can evaluate my decision more fully. Matt's office manager, Jennifer, is a great part of the team too. She is always pleasant and has helped me a number of time with paperwork on new accounts and transfering funds to and from my accounts.

When I come to them with questions they give me the benefit of their experience quickly and confidently. Their confidence in both themselves and me makes the good trades better and the bad trades more easily accepted.

I would recommend Optimus Trading to anyone who was considering a relationship with a new broker.

Christopher N
White Bear Lake, MN

Hello Matt

We have worked together about 3 years and I want to thank you, Chad and Jennifer for all you have helped me with over that time. It’s a pleasure to work with people you can call friends. It’s great to know when you call you can talk with someone that knows your name and makes you fill like they actually want to help you. Chad is great with managing automated systems and Jennifer with keeping my accounts straight. You have a great team and I’m looking forward with working with your firm for years to come.

Again thanks for everything

Gary D
Brighton, TN

I have been with Optimus Trading for a few years now, and have been consistently impressed with their level of service. I’ve had other brokers who didn’t know my name, who didn’t care if I lost every cent in my account, and who treated me as an inconvenience. The folks at Optimus have always been courteous, have at times steered me away from making unwise trades, and have, in general, been a pleasure to work with. In addition, the Optimus website has a lot of valuable information and the periodic blog updates are very helpful. I recommend Optimus as a partner for anyone’s commodities trading business.

Christopher Young
Poulsbo, Washington

 

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