I wish I had Lee Lantz’s marketing talents. Lantz was a Los Angeles fish merchant who repackaged the Antarctic toothfish in 1977. He called the fearsome-looking specimen, with its bulging eyes and protruding teeth, Chilean sea bass, even though it’s not a bass and doesn’t swim off Chile’s shores. As evidence of Lantz’s marketing success (and the fish’s dwindling numbers), my local fishmonger charges $33 a pound for it.
About the same time Lantz was toying with new fish names, I was starting my career in a then-obscure corner of investments: managed futures. Even though I think managed futures belong in everyone’s portfolio, the concept has been a marketing challenge. If my relatives thought “managed futures” was a counseling service for college seniors, well, who could blame them?
Explaining its strategies to newcomers and tackling, say, the role of algorithmic-driven trend following can lead to clients’ eyes glazing over. The managed futures industry is very diverse, but managers who rely on trend-following models to identify patterns early that will last for a period of time have the bulk of the assets under management.
Yet if it’s diversification you are looking for, it’s worth spending some time getting comfortable with this asset class sooner than later. Financial markets are creating a potentially favorable environment once again for this historically highly non-correlated approach.
Start with what some commentators are calling the “stress test” of 2015, those weeks in late August and early September when markets swooned and volatility increased.