Deep Dive: This investment strategy acts on 18 trends to cut your risk when the stock market is volatile

by | Aug 26, 2022 | Stock Market

Managed futures strategies can be helpful to investors during times of economic uncertainty. The strategies seek to take advantage of price trends — up or down — and produce positive returns that offset declines elsewhere. Having some money committed to a managed futures strategy can lower a portfolio’s overall risk and potentially keep an investor from making a rash move they may regret later.

Yung-Shin Kung, investment chief of quantitative investment strategies at Credit Suisse Asset Management in New York, described a managed futures strategy that takes advantage of market rotations that give rise to “tradable trends.” These price trends occur and can be profited from because of “lead and lag effects” in how investors process information and make investment decisions, Kung said in an interview. He added that a managed futures strategy gives the average investor access to the type of dynamic trading decisions that hedge funds use. Many institutional money managers have formal decision-making processes that can slow them down, he said. The managed futures strategy isn’t meant to be correlated with the performance of the stock market. This year has been one of broad declines for stocks and bonds, as the Federal Reserve has taken steps to clamp down on high inflation. It has also been a goo …

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