Commodity Trading Advisors are no longer viewed as just Portfolio Managers. helpful hints 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. CTAs are also more involved in 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 a bond or equity portfolio that are brought on 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. There continues to be an ever expanding list of over-the-counter derivative products. SWAPS are SWAPS. SWAPS are privately traded products that are not transacted through a recognized exchange. The difficulty is the buyer and seller must find each other to undertake such an arrangement, not always easy. The second problem 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. Understanding the industry from a different perspective is essential to understanding the changing investment climate. Analysis now becomes the catalyst to include a value added service to retain customers. Structured products, risk management, and OTC derivatives are all included. The best in the business have always been known for their commitment to continuing education.