Managed Futures Account

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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated November 11, 2020

What is a Managed Futures Account?

A managed futures account is an alternative asset created and maintained by a commodity trading advisor (CTA). The account invests in commodity futures contracts

How Does a Managed Futures Account Work?

When you buy a managed futures account, in essence you're hiring an expert to buy, sell and manage futures contracts on your behalf. 

Managed futures accounts tend to be uncorrelated to either the stock market or bond market. That means when the stock market zigs, managed futures accounts tend to zag. That can make managed futures accounts a good asset for diversifying a portfolio.

But because they tend to be illiquid and highly-leveraged, managed futures accounts should be considered as speculative and somewhat risky. 

Why Does a Managed Futures Account Matter?

Managed futures accounts aren't for the average investor, but if you like taking a little risk, they could be a great part of a diversified portfolio. 

The most obvious obstacle to investing in managed futures accounts is that you need to be an accredited investor. The "accredited investor" label is used by the SEC to identify investors who are wealthy enough (and theoretically sophisticated enough) to invest in risky assets like managed futures accounts. 

Most managed futures accounts also have account minimums, meaning that you must invest at least $250,000 to get your foot in the door.

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