What are Alternative Investments?

Alternative investments represent an asset class, or skill-based strategy, that has the potential to provide returns that are not correlated to traditional stock and bond returns or economic cycles. The advantage of non-correlated investments is that when added to a traditional portfolio they can increase overall portfolio returns while reducing risk. Such investments are generally managed by investment professionals who specialize in a specific sector or style. Examples include asset classes such as commodities and real estate, or skill-based money management found in managed futures and hedge funds.

Commodities

Commodities represent real assets, tangible objects you can touch, which distinguishes them from capital or financial assets. Commodities are the raw materials used as inputs in the production of goods and services. They include energy products, such as crude oil and natural gas; metals such as gold, silver and copper; and agricultural products such as wheat, corn, soybeans and cattle.

North American commodity futures markets originated more than 150 years ago, when a central marketplace was created for farmers to sell their grain for either immediate delivery, or for forward delivery. The concept of forward selling grain helped to stabilize seasonal volatility, and was the forerunner of modern day futures contracts. These markets have evolved significantly, and today, futures and options contracts are traded on an array of agricultural products, metals, energy and soft commodities on exchanges around the world.

Commodities have also evolved as a valuable asset class with the development of commodity indices. Recently, the introduction of investment vehicles that track commodity indices have emerged in many forms, including futures contracts, mutual funds and ETF's.

Managed Futures

The managed futures sector, refers to professional money managers known as Commodity Trading Advisors or CTAs, who manage assets using the global futures and options markets as their investment universe.

CTA's have the opportunity to participate in many market sectors by utilizing a technical, systematic approach to trading, or by relying on a fundamental, discretionary strategy. Trade concentration may center on specific futures markets, such as agricultural, currencies, or metals, while a more diversifed all-encompassing methodology may be employed.

Managed futures have been available for investment since 1948 when the first public futures fund began trading. Since then, the sector has seen significant growth and today accounts for more than $184 billion under management.

There are three basic ways in which investors can access managed futures:

• Commodity Pool
• Public Commodity Fund
• Separately Managed Account

Each of these structures has its specific benefits and risks. Investors considering investing in managed futures should assess their own particular needs and objectives to determine which strategy and structure is best suited for them.

RCG Alternative Investments is currently recommending several CTA's. Contact us to find out more.

Trading Accounts

RCG Alternative Investments offers traders competitive clearing rates, access to superb trading platforms (including RCG ONYX2), a staffed 24-hour trading desk, research and more.

This full range of support and services is available to clients interested in either of these account choices:

• Self-Directed
• Brokers Assisted