Top 5 reasons to incorporate CTAs into your portfolio
1. Diversification beyond traditional asset classes
CTAs as an alternative asset class continue to achieve strong performance in both up and down markets, showing low correlation to traditional asset classes, such as stocks, bonds, cash and real estate.
2. Reduce overall portfolio volatility
In general, as one asset class goes up, some other asset classes go down. CTAs invest across a broad spectrum of asset classes with the goal of achieving solid long-term returns.
3. Increase returns and reduce volatility
Allocating to CTAs in conjunction with traditional asset classes, may reduce risk, while at the same time potentially increasing returns.
4. Returns in different economic environments
CTAs can generate returns in bull and bear markets, boasting solid long-term track records despite economic downturns.
5. Strong performance in market downturns
CTAs can do well in down markets because they employ short-selling and options strategies that allow them to profit in such markets.
So! What’s the verdict, will you be adding CTAs into your portfolio? Or do you already have them – list your thoughts below.
You may also be interested to read the following articles to come out of the CTA World Congress Europe event in March 2012:
> What is the common thread that bonds the CTA industry together?
> Why do CTAs, often called the black box of the investment industry, attract investors?
> 6 things investors consider when considering CTAs as part of their investment portfolio?
> The key reasons investors adopt a systematic approach
If you are interested in finding out more about how you can incorporate CTAs into your investment portfolio then you may be interested in attending the CTA World Congress part of Quant Invest in November 2012.