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Our Philosophy

We believe managed futures will outperform other alternatives in a market crisis, that there is much more to managed futures than trend following, that large managers have a declining return profile because of their size, that buy & hold commodity investing is overly risky, and that better portfolio diversification is achieved through allocating to multiple “right-sized” managers with meaningful commodity exposure across different markets, trading strategies, and time frames.

 

 

Alternatives Aren’t Always Alternative

Venture capital, private equity, and most hedge funds are actually an extension of the equity class (stocks), not an alternate asset class altogether. Real Estate and buy & hold commodity investing likewise rely on a growing economy as one of their return drivers – causing periods like 2008 when these so called alternatives lost money alongside stocks.

 

Alts not Always Alternative
(Disclaimer: Past performance is not necessarily indicative of future results)

 

 

Diversify the Diversifier

There are various non correlated strategies within the managed futures category such as Agriculture Trading, Short Term Trading, Relative Value, and more; all of which provide not just non-correlated returns to the stock market, but also to one another, enabling investors to diversify their diversification.

 

Diversify.2

 

 

Bigger ≠ Better

Over 65% of the assets in managed future are controlled by just 3% of the managers, as investors choose the fancy brochures and pedigrees of the $1 Billion+ funds. But these managers have underperformed smaller managers – due to deleveraging to meet institutional targets, the inability to access less liquid commodity markets such as Cotton or Cocoa without hitting position limits, and the inevitable mental shift to protecting assets under management rather than growing them.

 

asset_size_return
(Disclaimer: Past performance is not necessarily indicative of future results)

 

Other Opportunities

We believe there are better opportunities out there, for those willing and able to look, among the so called mid-tier managers who fly under the radar by only managing 10s to 100s of millions instead of billions. Such managers are ‘right-sized’, being small enough to still access commodity markets like Cotton, Corn, and Cattle; yet large enough to have professional grade operations. The Attain Family of Funds is built around such managers.

 

PHILOSOPHY_IMAGE_MONTAGEB

It’s All About Commodities

One of the reasons some alternatives have been able to perform in an otherwise poor period for managed futures and global macro strategies is greater exposure to commodities, providing access to moves such as accompanied the Russian drought of 2010, Plains blizzard of 2013 and pig virus in 2014.

Nasa-Pic

The picture from Space that shows why Commodities are non-correlated to Stocks:


“Between October 3–5, 2013, an unusually early blizzard smothered northeastern Wyoming and western South Dakota with wet, heavy snow… In South Dakota’s Black Hills, the storm dropped more than three feet (90 centimeters) of snow in some areas, knocking out power for about 25,000 people and killing tens of thousands of cattle.” – NASA

Because this massive storm hit so early, the cattle weren’t able to grow their winter coats in time and many of them froze to death. Many, as in 15% to 20% of South Dakota’s cattle population died in this storm, sending Cattle futures about 6% higher. Things like a freak blizzard causing an up trend in cattle prices simply aren’t part of the stock market world. Prices aren’t rising because of a good consumer confidence number, earnings report, or interest rate decision. Prices are rising because there are 30,000 less cattle in the world (economics 101 = supply down, price up). In more sophisticated vernacular – the two markets have different price drivers, and the price driver for the cattle is about as far away from the price drivers for the stock market as you can get.

The Attain Alternatives Blog, 10/25/2013.

 

Buy & Hold Commodities is Risky

But while commodities have benefitted some programs, they’ve mostly been a loser for investors diversifying their portfolios into them. This is due to investors gaining access through commodity indices and single commodity ETFs which are ‘long only’, requiring commodities to continuously go higher. The end of the commodity super-cycle in 2008 showed how dangerous a buy & hold commodity strategy can be, with ETFs such as DBC losing -60% over an 8 month period; while single market ETFs have mainly underperformed the markets they track.

 

Commodity Index_2
(Disclaimer: Past performance is not necessarily indicative of future results)

 

 

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What we do is only half the story. Who’s doing it is the other. Meet our team..

There is no guarantee that any investment product will achieve its objectives, generate profits or avoid losses.

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The risk of loss in trading commodity futures contracts, whether on one's own or through a managed account or pooled ‘fund’, can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. You may sustain a total loss of the investment. The information contained within this website is provided to present general information on our services and managed futures platform, and is intended for informational purposes only. It should not be viewed as a solicitation for any specific fund, which requires investor qualification as an accredited investor and the receipt of an offering document. Futures trading and investments in such trading is not suitable for all investors. You should not rely on any of the information as a substitute for the exercise of your own skill and judgment in making such a decision on the appropriateness of such investments.