Investing in managed futures (MLM Index)

J

JoshuaFree1

Hi,

I know this is a traders message board, however I wanted to know if anyone had any experience in longterm investing in the commodities markets:

specifically with unleveraged index funds like the MLM index (http://www.mtlucas.com/) or something like the DJ-AIGCI?

Thank you for your help,
Josh
 
Quote from Joaquin Setanti:

Be wary of the man who urges an action in which he himself incurs no risk.
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Do you know anything about the question I asked, or are you just using this thread as a method to increase your post count...

Seriously though, if someone knows of a more appropriate message board to use, then I'll relocate to it.

I was just hoping to find some way to invest in an unleveraged pool of commodities while I am still a non-accredited investor as defined by the SEC.
 
Yeah, just buy and hold a commodity index futures contract. I think the AIG future is the most liquid one lately. It used to be the CRB index future. Every three months you'll have to roll to the new contract month, but on the plus side, you won't have to pay any management fees.

Or there are natural resource sector mutual funds.

Or check out the Jim Rogers Raw Materials Fund at rogersrawmaterials.com

Or, for that matter, just about any managed futures fund is a good diversifier for a larger portfolio of equities and bonds. See iasg.com for a list.
 
Do brokers have special rates for these tiny CME TRAKRs contracts? If they cost the same to trade as other futures (e.g. ES, NQ, 6E), the commissions would be prohibitive.

The AIGCI contract, for example, is around 25.00, and the multiplier is only $1. So, if it moves 10%, you win/lose $2.50 per contract. If you pay commission of $2.50 per contract per side, that would be a commission rate of 20%!

The CBOT version of the contract is much more sensible, priced at the actual AIGCI index value (around $370) with a $100 multiplier. So, with a 10% move, you win/lose $3700.
 
If you are looking for a diversifier in your long term portfolio you may want to review these mutual funds:

PCRDX - Pimco Commodity Real Return Strategy (use the no-load shares)
PSAFX - Prudent Safe Harbor Fund

You may also want to consider mutual funds that have an orientation to either gold mining stocks or oil/natgas stocks, which may offer some correlation to those commodities.

(I can't believe I'm talking about investing in mutual funds in a commodities futures thread).
 
Quote from alanm:

Do brokers have special rates for these tiny CME TRAKRs contracts? If they cost the same to trade as other futures (e.g. ES, NQ, 6E), the commissions would be prohibitive.

The AIGCI contract, for example, is around 25.00, and the multiplier is only $1. So, if it moves 10%, you win/lose $2.50 per contract. If you pay commission of $2.50 per contract per side, that would be a commission rate of 20%!

The CBOT version of the contract is much more sensible, priced at the actual AIGCI index value (around $370) with a $100 multiplier. So, with a 10% move, you win/lose $3700.
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The FAQ here makes me think you should pay the stock trading commissions for these, even though they have features of both futures and stocks:

http://www.trakrs.com/faq.asp

I wonder how most brokers are handling this.
 
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