Commodity Trading Advisors are no longer viewed as just Portfolio Managers. www.fxcm.my/komoditi/ As investment products have become more complex, his role has grown considerably.
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Commodity Trading Advisor, Genuine Trading Solutions, a registered CTA with the CFTC, says the role today of a CTA is constantly evolving.
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. It is clear that today's investors are more sophisticated. In response, today's selection of investment products has become ever more complex and varied, the need for the CTA to understand the uses and management of these products becomes even more acute.
So what exactly is the role of today's Commodity Trading Advisor. Certainly trading of derivative products for a managed futures fund continues to be as important as before. CTAs are also more involved in derivative analytics. This role is focused on becoming an analyst who can structure and analyze more complex requirements from hedge funds, pensions funds and structured products.
In order to preserve asset growth, it is crucial to use derivative analytics in order manage adverse risks of an equity or bonds portfolio caused by adverse market conditions. The uses of hedging to prevent volatility has long been understood by the largest institutions but is now available to the smaller sized company and to the individual investor. As products continue to develop, the CTA will also evolve to meet the needs of today's professional manager.
Derivatives are not limited to commodities exchange traded futures and options. There continues to be an ever expanding list of over-the-counter derivative products. SWAPS are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. The difficulty is the buyer and seller must find each other to undertake such an arrangement, not always easy. Second, there is no liquidity. If one party wants to cancel the deal before the agreed date, there is no one else to sell it to.
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. This includes structured products, risk management and OTC derivatives. Continuing education has been and continues to be the hallmark of the best in the industry.