CARAT CAPITAL

Alternative Investment Strategies: Diversification!

It should be noted that an investment in hedge funds or alternative investment strategies is not for everybody.  Investors should: (1) always understand the investment they are making, and (2) realize that there is risk of loss in a futures investment.  This notwithstanding, futures markets are tremendous diversifiers for traditional portfolios of stocks and bonds.  The economic function of financial assets, such as stocks and bonds, is that of "capital formation."  On the other hand, the economic function of futures markets is that of "risk transfer."  As a result, we would expect relatively low correlation of returns between financial assets and the futures markets.  

• We believe that managed futures is one of the most interesting subsets of HEDGE FUNDS.

• We have also developed shorter-term strategies on major markets that have proven to produce excess returns and low correlations to traditional assets such as stocks and bonds.

• Another strategy that we apply is to trade volatility as an asset class.   

More recently, the financial meltdown in 2008-2009 -- also saw managed futures perform well.  Many futures programs benefited from extreme moves in the currencies, commodities, and bond markets.  Please CLICK HERE for recent correlations (as well as two-year rolling correlations) for our futures program versus the S&P 500 and Bond Market.  

An investment in managed futures can help to smooth the growth of a traditional portfolio of stocks and bonds.

Past performance is not necessarily indicative of future results.      

An investment in futures can result in losses.