Managed Futures – The Mind Games Of 2016 Markets

The markets are beside themselves. They don’t know if and when the fed will raise rates, they don’t know how to react to this political cycle, and in the aftermath of Brexit, it seems that all the volatility has been sucked out of the markets.

Long-Only Commodities and Managed Futures were the only asset classes that had moves of 1% or more in August. Off of an abysmal July, Commodities are now barely above 0.00% YTD.  Stocks haven’t moved 1% or more 37 consecutive days, and bonds remain range bound. Real Estate remains the clear leader in 2016, despite loses in August.

As for Managed Futures, it proved difficult to find returns in an environment what markets are one their toes waiting for something to happen. Metals, remain in a very tight range, Softs and Currencies have gone through V-shaped reversals, while Energies have gone through two V-shaped reversals. Add that all up, and Managed Futures was unable to find returns to hold onto, down -3.07% in the month of August, but remains up +2.27% YTD {Disclaimer: Past performance is not necessarily indicative of future results}.

The good news, is if you happen to be diversified across all these asset classes, your portfolio is looking good, as they are all in the positive on the year. But with possible fed rate hikes, and uncertainty heading into this election, it seems we could see some shocks of volatility on the horizon.

Managed Futures - The Mind Games Of 2016 Markets

Managed Futures

Managed Futures - The Mind Games Of 2016 Markets

Source: All ETF performance data from Morningstar.com

Sources: Managed Futures = Newedge CTA Index, Cash = 13 week T-Bill rate,

Bonds = Vanguard Total Bond Market ETF (BND),

Hedge Funds= IQ Hedge Multi-Strategy (QAI)

Commodities = iShares GSCI ETF (GSG);

Real Estate = iShares DJ Real Estate ETF (IYR);

World Stocks = iShares MSCI ACWI ex US Index Fund ETF (ACWX);

US Stocks = SPDR S&P 500 ETF (SPY)