Today's Commodity Trading Advisor is no longer to be thought of only as a Portfolio Manager. recommended reading As investment products have become more complex, his role has grown considerably.
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Commodity Trading Advisor at Genuine Trading Solutions is a CTA registered with the CFTC. He says that the role of a CTA today is always changing.
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. There is no question today's investor has become 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. Certainly trading of derivative products for a managed futures fund continues to be as important as before. A CTA has also become more involved with 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. Over-the-counter derivatives continue to expand. These 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. 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. 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.