Who regulates CTAs?

Registered CTAs are regulated by both the federal Commodity Futures Trading Commission (CFTC) as well as the National Futures Association (NFA). All advisors must be registered with the CFTC, and those managing customer accounts must be members of the NFA. For more information, see www.cftc.gov and www.nfa.futures.org.

How are fees structured?

Managed futures accounts are actively managed and traded by a CTA. Therefore, they typically have higher fees than accounts in equity markets. A flat management fee of one or two percent based on assets is usually charged to cover overhead and administrative expenses. In addition, a performance or incentive fee is charged based on profits in the account—usually around 20%, but this can vary by manager. This cost almost always is calculated net of account costs such as fees and commissions.

What is the minimum investment?

Minimum investments vary with each managed account program. Larger minimums are usually required by managers who serve larger clients or need more capital to make their trading strategy viable. However, there are many managed futures programs that offer a range of minimum investment amounts serving various clients and risk profiles.

How is performance reported?

CTA managers report performance net of all commissions and fees. Performance figures are commonly found in CTA managers’ Disclosure Documents and marketing materials.

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