Managed futures 'thrive on market volatility'

Managed futures could offer investors the opportunity to hedge their portfolios during economic turmoil, one expert has claimed.

This type of venture uses a computer-driven trading model to bet on increasing or decreasing prices of future contracts, with David Darst of Morgan Stanley describing them as ’financial Tylenol’, the New York Times reports.

’Managed futures tend to do well during periods of great market volatility,’ the chief investment strategist remarked, adding that this sort of investment is often limited to individuals with a net worth of at least $1 million (£600,000).

According to Mr Darst, people operating in this sector should look to put about four per cent of their entire portfolio into such investments, as they often react differently to traditional markets such as stocks and bonds.

The recent Lipper Tass Flash Estimate Report, which tracks the main trends and performance drivers for managed futures strategies, revealed that the category posted an average return of 1.41 per cent for September.
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