Commodity Trading Advisors are no longer viewed as just Portfolio Managers. useful link As investment products have become more complex, his role has grown considerably.
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Commodity Trading Advisor at Genuine Trading Solutions is a CTA registered with the CFTC. He says that the role of a CTA today is always changing.
Dwayne Strochen, the President of Genuine Trading Solutions, says that a Commodity Trading Advisor used to be satisfied with being known as a portfolio manager trading commodities and futures in a managed fund. There is no question today's investor has become more sophisticated. As a result, the selection of investment options has grown more complex. This makes it even more important for CTAs to be familiar with the management and use of these products.
What is the exact role of a commodity trading advisor today? Certainly trading of derivative products for a managed futures fund continues to be as important as before. A CTA has also become more involved with derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.
The use of derivative analytics to manage the adverse risk of an equity or bond portfolio brought about by adverse market conditions is critical in preserving asset growth. Hedging is a proven way to reduce volatility. The largest institutions have known this for years, but now it's available to smaller companies and individual investors. As products continue to develop, the CTA will also evolve to meet the needs of today's professional manager.
Derivative products are no longer limited to exchange traded commodities futures and options. Over-the-counter derivatives continue to expand. These are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. It is not always easy to find a buyer and a seller who are willing to enter into such an agreement. The second problem is no liquidity. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.
The role of a commodity trading advisor is not limited to just trading. It is now imperative to understand the industry in a new light so to understand the changing investment environment. Analysis now becomes the catalyst to include a value added service to retain customers. Structured products, risk management, and OTC derivatives are all included. The best in the business have always been known for their commitment to continuing education.