FTC futures funds: highly positive in the first three quarters
With hedge funds largely returning negative yields in year two of the ongoing credit crunch, practically the only investment sector to witness considerable growth has been managed futures. Internationally, FTC's funds once again rank among the best-performing products in this asset class.
September 2008 has been one of the most dramatic months ever. The Dow Jones stock index posted the biggest single-day fall (777 points on September 29) in its one hundred year plus history. Practically every index plummeted during this turbulent period. Even hedge funds, often regarded as a relatively safe bet, appear to have taken a further nose-dive: as of October 6, the Barclay Hedge Fund Index showed a present indicative monthly loss of around 5.5 % and a provisional annual result of around –11 % as of the third quarter.By comparison, managed futures have coped much better with the extremely tough market situation - the key benchmarks indicate positive yields for the current year, the Barclay CTA Index showing 7.5 % (also indicative as per end of September). FTC's futures funds have once again significantly outperformed their rivals. The flagship product, FTC Futures Fund Classic, posted a monthly performance for September of 8.6 % and closed out the third quarter with a provisional annual yield of 24.1 %.
"Managed futures in general and those of FTC in particular have yet again emerged as the last bastion of cyclical downward markets," says CEO of FTC Capital, Eduard Pomeranz. Incidentally, according to FTC's founder, this is an appropriate time to reiterate the differences between managed futures and hedge funds: "It comes down to the structure of these strategies that hedge funds are currently failing to live up to their role as portfolio stabilizers. Typical hedge funds are not market-independent, but in the long term demonstrate a highly positive correlation with the stock market - hardly surprising, given that the larger part of the hedge fund industry is predominantly focused on buying and short selling stocks." There are apparently other major differences to those instruments which are usually meant when people talk about "hedge funds": "There are three main things which set us apart: firstly, we neither buy nor sell individual stocks. Secondly, we never leverage our assets on credit and, thirdly, we do not trade in over-the-counter securities or derivatives, but exclusively in highly liquid, standardized futures contracts listed on regulated stock exchanges. Stock index futures are only part of the broadly diversified investment universe, which also includes interest, currencies and commodities."
Despite posting significant profits, FTC is, says Pomeranz, still perturbed by the current financial crisis: "At the end of the day the crisis is bad for everyone and nobody can exploit that. We are nevertheless proud to have been able to offer our investors, who are currently suffering losses with most other asset classes, at least some form of stability." Given the crisis, what the entire investment branch needs right now is unconditional information for investors as well as risk transparency. One of the steps in this direction has been to shift FTC Futures Fund Classic, which is licensed for public sale in Austria, to weekly (from hitherto twice monthly) liquidity. This means that from now on, units can be subscribed or bought back weekly (the effective date is the last trading day - usually the Friday).