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Managed Futures Still Popular Investment Choice, Despite Poor Returns

by Phillip Morton, Investors Offshore.com

26 February 2007

Despite weak returns last year, money under management in the managed futures sector grew from $130.6 billion to $170 billion during 2006, according to data released by The Barclay Group.

”Even though managed futures returns were modest in 2006, asset growth has continued unabated,” observed Sol Waksman, president and founder of The Barclay Group.

He added: “We normally wouldn’t expect to see a 30% jump in assets in a year where CTAs returned just 3.66%.”

The Barclay CTA Index gained 3.66% in 2006, while the Barclay BTOP50 Index, which monitors performance of the largest CTAs, gained 5.87%.

“Unfortunately for the smaller firms, a good share of this money has gone to the largest CTA firms,” revealed Waksman.

“In the past, investors were quite willing to allocate funds to smaller firms, but in the current climate they’re increasingly turning to the biggest players.”

Managed futures gained 0.72% in January 2007, according to flash estimates from the Barclay CTA Index.

“The rise in US interest rates helped fuel a rally in the USD against European, Japanese, and Canadian currencies,” noted Waksman.

All eight of Barclay’s CTA indices gained ground in January. The Financial and Metals Index was up 0.91%, Systemic Traders gained 0.71%, the Diversified Traders Index was up 0.68%, while Discretionary Traders rose 0.49%.

Waksman explained that:“Rallies in gold and natural gas prices also helped many traders to achieve a profitable month. Agricultural markets were more difficult as prices for corn and soybeans dropped at the beginning of the month only to rally back at month-end.”

The Barclay BTOP50 Index gained 0.60% in January.

The Barclay Group, founded in 1985, actively tracks more than 6,000 hedge funds and managed futures programs. Barclay has created and regularly updates 18 proprietary hedge fund indexes, and eight managed futures indexes.

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