Why do CTAs, often called the black box of the investment industry, attract investors? #CTAEU
After 20 years at AHL, one of the largest CTA funds in the world, Tim Wong certainly has the credentials to comment. Although he’d rather be working diligently at his desk, Tim provided some invaluable insights into the CTA world at today’s CTA World Congress Europe, organised by Terrapinn.
Why do CTAs, often called the black box of the investment industry, attract investors?
Simply put – diversification and protection from long-term market stress.
Tim Wong made it very clear in his keynote presentation that CTAs should no longer carry the black box adage, and that they are actually very transparent.
The CTA universe is also diverse enough to offer investors a range of choices including…
- Systematic vs. discretionary
- Short-term vs. medium to long-term
- Diversified vs. sector specific
- Trend following vs. multi-strategy
…making it an attractive looking option.
Looking at the critical debate of “Systematic Vs Discretionary” Mr. Wong asserts that no CTA is 100% systematic.
He highlights the key differences:
- Systematic: computer systems used to generate trades
- Discretionary: trades generated using human judgment/discretion
- Systematic managers account for the bulk of assets
What do you think? Do you agree with Tim that CTAs should lose their “black box” image?
Let us know your thoughts below…
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