Why call them Commodity Trading Advisors?

| | Agriculture, Commodity Trading Advisor, Crude Oil, CTA, Energy, Financial Futures, Grains, Indexes, Livestock, Managed Futures, softs

Commodity Trading Advisors, or CTAs, as they are commonly referred to have long been pigeon holed in the Managed Futures industry as professional money managers that trade commodities.  Most people liken them to what they see in the movies.  The reputation is that these are free wielding traders that have unlimited risk appetite in search of making a fortune.  It may be true that speculative commodity traders that are depicted in the movies seek out returns that perhaps a novice or capital preserving investor would never be able to stomach, but most professional money managers trading in Managed Futures are seeking a risk/reward profile that appeal to a broader investing community.

As for the “commodity” tag which is born in the name Commodity Trading Advisor, CTAs are actually professionally trading Futures contracts which can consist of far more than commodities such as corn, wheat, soybeans, cattle, lean hogs, coffee, cocoa, sugar, gold, silver, etc.  Rather CTAs trade a large variety of products spanning many markets and exchanges.  This can include currencies, stock indexes, grains, interest rates, energy, softs and livestock.  The notion that they only trade “commodities” is a misnomer.  Perhaps a more appropriate title is Futures Trading Advisor or Futures Wealth Manager.  Most investors new to this space learn quickly that getting proper diversification in Managed Futures extends far beyond just trading commodity futures.