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EQCHX what are your thoughts on this new Managed Futures Fund?
My thought is don't invest in managed futures if you are not willing to deal with periods where the strategy underperforms and/or may do poorly. See my discussion of the Pimco MF fund, as well.
I'll have to look at this particular fund in more detail, but I think my thought is universal to the category: don't expect managed futures funds to be consistent performers. The strategy is an interesting diversifier and may do well during periods like 2008.
Again, I'm definitely not against the strategy at all (I am invested in it), I'm just saying,there have been instances of hot funds on this board before and then when the fund doesn't do well, people dump it. When the Pimco Managed Futures fund did very well last year, I said there will be a point - and probably not that far in the future - where this fund doesn't do as well and people are going to dump it.
MF has a place as a diversifier and returns are often not highly correlated to the market, but it's not going to hit home runs that often and may not do well for periods of time.
Thanks for bringing this fund to our attention. It certainly has had great returns.
Scott makes some good points.
It looks like Equinox has 3 managed futures funds. According to the annual report, Equinox Chesapeake Strategy Fund (EQCHX, up 12.6% YTD, 43% 1 year) follows a "classic" trend following program. Equinox Crabel Strategy Fund (EQCRX, down 1.28% YTD, up 3.77% 1 year) uses a very short term trading program. Equinox BH-DG Strategy Fund (EBHIX, up 5.55% YTD, up 23.50% 1 year) uses a medium-term trend following program. Unsure what "classic" trend means for EQCHX, but maybe it is longer trend? My guess is that EQCHX will excel as it has during certain environments (the market has seemed to defy gravity for the most part and continues mostly in 1 direction in it's push up), and EQCRX might excel, at least compared to EQCHX, during more uncertain and choppy markets. EBHIX might be the happy medium. So if we get more volatility, my guess is EQCRX, despite it's lousy performance, could perform better.
How would an investor find a fund in this category that they would be assured could perform in a steady performance pattern over the years?
Yes, there are winners and losers over various time frames; but most investors here at MFO, are managing their "future" mix of funds for steady and positive returns, just not using the "common futures tools" that these funds use.
Check the 3 and 5 year average returns at the link above. Also look at some of the winners and losers in various time frames. One would have to hold 10 of these type of funds to hope for a decent averaged profit, using a best guess method, IMO.
I don't think anyone is advocating putting a big part of one's portfolio in managed futures. It is just another diversifier. I have owned PQTIX, which represents 3% of my portfolio, for about a year and it has done well. I am considering selling it and buying AHLPX, which has had better returns with lower volatility. I understand there is a chance these funds might not continue to do well (just as other investments, such as the stock market), but I am comfortable keeping a small amount in managed futures.
Ted, I am not completely sure if I understand what you mean. I regard a fund that invests in commodities and currencies as a diversifier, unless you don't believe diversifying is a good strategy. To each his own.
Comments
I'll have to look at this particular fund in more detail, but I think my thought is universal to the category: don't expect managed futures funds to be consistent performers. The strategy is an interesting diversifier and may do well during periods like 2008.
Again, I'm definitely not against the strategy at all (I am invested in it), I'm just saying,there have been instances of hot funds on this board before and then when the fund doesn't do well, people dump it. When the Pimco Managed Futures fund did very well last year, I said there will be a point - and probably not that far in the future - where this fund doesn't do as well and people are going to dump it.
MF has a place as a diversifier and returns are often not highly correlated to the market, but it's not going to hit home runs that often and may not do well for periods of time.
Scott makes some good points.
It looks like Equinox has 3 managed futures funds. According to the annual report, Equinox Chesapeake Strategy Fund (EQCHX, up 12.6% YTD, 43% 1 year) follows a "classic" trend following program. Equinox Crabel Strategy Fund (EQCRX, down 1.28% YTD, up 3.77% 1 year) uses a very short term trading program. Equinox BH-DG Strategy Fund (EBHIX, up 5.55% YTD, up 23.50% 1 year) uses a medium-term trend following program. Unsure what "classic" trend means for EQCHX, but maybe it is longer trend? My guess is that EQCHX will excel as it has during certain environments (the market has seemed to defy gravity for the most part and continues mostly in 1 direction in it's push up), and EQCRX might excel, at least compared to EQCHX, during more uncertain and choppy markets. EBHIX might be the happy medium. So if we get more volatility, my guess is EQCRX, despite it's lousy performance, could perform better.
Regards,
Ted
(A Little Dated But Food For Thought):
Nine Reasons To Just Say No To Managed Futureds Funds:
http://www.forbes.com/sites/greatspeculations/2012/07/31/nine-reasons-to-just-say-no-to-managed-futures/print/
Managed Futures Funds Exposed:
http://macmllc.com/Managed-Futures-Mutual-Funds-Exposed.pdf
How Investors Lose 89%: Of Gains From futures Funds:
http://www.bloomberg.com/news/articles/2013-10-07/how-investors-lose-89-percent-of-gains-from-futures-funds
How would an investor find a fund in this category that they would be assured could perform in a steady performance pattern over the years?
Yes, there are winners and losers over various time frames; but most investors here at MFO, are managing their "future" mix of funds for steady and positive returns, just not using the "common futures tools" that these funds use.
Check the 3 and 5 year average returns at the link above. Also look at some of the winners and losers in various time frames. One would have to hold 10 of these type of funds to hope for a decent averaged profit, using a best guess method, IMO.
Regards,
Catch
Regards,
Ted