Commodity Trading Advisors are no longer viewed as just Portfolio Managers. click here His role has expanded considerably as investment products become more complex.
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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. As a result, the selection of investment options has grown more complex. This makes it even more important for CTAs to be familiar with the management and use of these products.
So what exactly is the role of today's Commodity Trading Advisor. Trading derivatives for a managed fund of futures continues to be important. A CTA has also become more involved with derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension 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. No doubt as products continue to evolve so too will the CTA evolve to meet the need of today's professional money manager.
Derivative products are no longer limited to exchange traded commodities futures and options. Over-the-counter derivatives continue to expand. These 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. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.
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. The analysis is now the catalyst for adding a value-added service to retain clients. 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.