Our Thoughts

Managed Futures Funds and Fees

If your financial advisor recommends that you invest in a managed futures fund, ask him or her to prove to you that the fund includes all its costs – costs of swaps and other offshore vehicles – in its total reported expenses. In a recent column (Saturday/Sunday January 28-29 edition of The Wall Street Journal), Jason Zweig states that “Managed-futures portfolios, which rapidly buy and sell anything from soybeans and cotton to rubles and rupees, can diversify the risk of a conventional stock-and-bond approach”….but, “many of these funds don’t report all their expenses directly.” Zweig singles out AQR Capital Management as one of the investment companies that discloses all of its costs in its 1.2% expense ratio, “a fraction of what hedge funds and other managed-futures fund vehicles cost.” Although Zweig doesn’t mention it by name, Aspen Partners, Ltd. is another investment company that discloses all of its costs in its 1.22% expense ratio. Clients of FJY own the funds of both these investment companies.

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Marjorie Fox