| Unlike what it sounds, a managed future is not about | | | | in short selling. |
| a college choice or a personal growth plan. On the | | | | Q: OK - what does short selling mean? |
| world of investment and finance, a managed future is | | | | A: There are two ways to buy and sell - either LONG |
| a type of investment choice. Unfortunately, many | | | | or SHORT. Short buying or selling is focused on |
| individuals without a finance background may not | | | | commodities that may be over-valued now. For |
| understand exactly what this is, so let us take a look | | | | example, the hedger farmer is going to secure a |
| at what this choice could mean to you. | | | | contract to sell his corn at today's prices because he |
| Q: What is a Future? | | | | thinks that corn prices are going to drop in the |
| A: A future is basically an agreement between the | | | | future. |
| investor (or buyer) to buy something at a set price | | | | Buying or selling long is focused upon commodities |
| sometime in the future. | | | | that may be under-valued now. A speculator may |
| Q: Is this something new? | | | | purchase gold contracts today because he believes |
| A: No. Futures have existed for more than 30 years, | | | | that gold prices will increase in the future and will sell |
| but are sometimes considered an alternative | | | | at the higher price. |
| investment due to their lack of popularity among the | | | | Q: What is a managed fund? |
| general population. | | | | A: A managed fund is one that has a professional |
| Q: What is a hedge fund? | | | | full-time administrator of the fund who is responsible |
| A: To understand this, you have to understand there | | | | for purchasing and selling futures in order to make |
| are two main players in the futures market. There is | | | | money. Many managed funds are rather secretive |
| a Speculator and there is a Hedger. The Hedger will | | | | and the strategies used by the administrator can |
| enter a contract to purchase or sell an item to guard | | | | vary as widely as their own personality. |
| against price risk. A great example of a Hedger is a | | | | Q: Are they a safe investment? |
| farmer who will enter into a contract to purchase | | | | A: The answer is yes and no. It really depends upon |
| seed today, but not for shipment in 6 months. The | | | | the strategy, knowledge and experience of the |
| reason for purchasing seed today is that the farmer | | | | administrator. |
| believes the future price of seed will increase in the | | | | In conclusion, a managed future fund is the perfect |
| upcoming months. | | | | way to introduce diversification to your portfolio. But |
| The speculator is someone who is not intending to | | | | it is also an investment choice that requires some |
| minimize risk, but instead wants to profit from the | | | | understanding and trust in the fund purpose and the |
| increase in price. The speculator is not someone who | | | | administrator of the fund. If you are interested in this |
| intends to take physical possession of the | | | | type of fund, take an afternoon and do a little |
| commodity, but is in the market only to make | | | | research to find the one that best meets your |
| money. | | | | needs. |
| A hedge fund therefore is a fund designed to engage | | | | |