what are managed futures 
managed futures refers to an investment where a portfolio of futures contracts is actively managed by professionals managed futures are considered an alternative investment and are often used by funds and institutional investors to provide both portfolio and market diversification managed futures provide this portfolio diversification by offering exposure to asset classes to help mitigate portfolio risk in a way that is not possible in direct capital investments like stocks and bonds the performance of managed futures tends to be weakly or inversely correlated with traditional stock and bond markets making them ideal investments to round out a portfolio constructed according to modern portfolio theory understanding managed futuresmanaged futures have increasingly been positioned as an alternative to traditional hedge funds funds and other institutional investors often use hedge fund investments as a way of diversifying their traditional investment portfolios of large market cap stocks and highly rated bonds one of the reasons hedge funds were an ideal diversification play is that they are active in the futures market managed futures have developed in this space to offer a cleaner diversification play for these institutional investors the rise of managed futuresmanaged futures evolved out of the commodity futures trading commission act which helped to define the role of commodity trading advisors cta and commodity pool operators cpo 1 these professional money managers differed from stock market fund managers because they worked regularly with derivatives in a way most money managers did not the commodity futures and trading commission cftc and the national futures association nfa regulate ctas and cpos conducting audits and ensuring that they meet quarterly reporting requirements 2 the heavy regulation of the industry is another reason these investment products have gained favor with institutional investors over hedge funds 