Morningstar Advisor - August/September 2011 - (Page 62)

Gray Matters How to Better Manage Your Clients’ Future(s) By Nadia Papagiannis Managed-futures strategies—now available to normal investors—can diversify traditional portfolios. Portfolio management has never been easy. But the events of 2008 made it more complicated. Headlines declaring that “diversification is dead” plastered the financial media, as every asset class, with the exception of government bonds, took a beating. Besides Treasuries, however, there was one other largely overlooked exception to the 2008 economic bloodbath, one that has recently gained much recognition—managed futures. Managed futures are automated, momentumbased trading strategies that take long and short positions in futures contracts. Hedge funds following managed-futures strategies gained an average of 9.9% in 2008, when the S&P 500 lost 37%. Until about 2008, only the wealthiest of investors could gain access to managed-futures strategies, which were typically offered in hedge funds or private accounts. Investment terms often included initial lockups, monthly redemptions, minimum allocations of at least $100,000, and worst of all, high management and performance fees. Recently, however, these strategies have migrated to more-investor-friendly vehicles such as mutual funds and exchange-traded funds and are being offered with much more reasonable terms. Today, an average investor with $2,500 (or even less in some cases) can gain access to managed-futures funds with 62 Morningstar Advisor August/September 2011

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2011

Morningstar Advisor - August/September 2011
Letter From the Editor
Simplicity and Design Matter
Do You Use ETFs Strategically or Tactically?
The Institutional Way
How to Analyze an ETF
Eyeing ETFs’ Next Chapter
Small-Cap/Large-Cap Flip-Flop?
Four Picks for the Present
Investment Briefs
Morningstar Investment Conference
Pitfalls of Peer Groups
A REIT Recovery, With a Catch
Turning Fund Distribution on Its Head
Here Come ETF Managed Portfolios
Circle These Picks Amid the Crop of New ETFs
ETF Analyst Favorites
Beware, the Accidental Portfolio Manager
It’s the Destination, Not the Vehicle
New Growth, Rooted in Experience
Better Ways to Look at ETFs
How to Better Manage Your Clients’ Future(s)
More Bargain Than Bubble
Cheap, Local, and On a Roll
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
First-Quarter Assets Hit an All-Time High
You Say You Want a Revolution?

Morningstar Advisor - August/September 2011