|The Role of Futures in Diversification
Futures constitute a beneficial asset class that can diversify traditional
investor portfolios in a prudent manner. The goal of diversification is
to spread risk among various asset classes preventing any one price or economic
event from unduly harming the portfolio while smoothing and balancing return.
Traditional stock and bond investors assume their portfolios are diversified
when in fact, studies show that stocks and bonds are highly correlated,
tending to move in parallel fashion. Alternatively, futures offer numerous
opportunities for non-correlated assets to be blended into portfolios, thereby
accomplishing true diversification.
Take a Total Portfolio View
Wealth management for average and high-net-worth individuals begins with
an appreciation of one's total portfolio of assets-employment compensation,
business ownership, pension funds, real estate, art and antiques, cash
holdings-not just the discretionary capital intended for stock and bond
investments. Using a total portfolio view, an allocation of 5% to 25%
in futures can be considered depending on the investor's profile, return
goals and risk preferences.
Allocate Among 60 Worldwide Markets
Trade Center Inc. (TCI) specializes in diversification through futures
investing and the disciplined administration of futures trading systems.
Computerized systems are unique in their ability to scan worldwide futures
markets on a daily or intra-day basis searching for non-correlated trading
opportunities. Diversified futures provide traditional one-basket investors
with access to approximately 60 different futures markets domestically
and globally. This broad range of assets allows TCI to customize futures
portfolio solutions to meet the special alternative investment needs of
Characteristics of Different Asset Classes
To reduce portfolio risk and improve returns each asset class in a portfolio
must be balanced in terms of near and long-term potential for return,
specific risk, leverage, liquidity and independence between assets as
markets evolve through periods of stability and volatility.