Managed Futures Monthlyfrom Wisdom Financial

Wisdom Financial Inc. is proud to release the informative, redesigned newsletter, "Managed Futures Monthly". Investing in the current market conditions can be a difficult task, that's why we are committed to providing you with the most recent managed futures information to keep you in the know.

Industry Update

The managed futures industry has grown drastically over the last 10 years and we believe it will continue to do so.

Last year alternative asset classes were given the perfect opportunity to show their real worth in a portfolio, and managed futures didn't disappoint. The Barclay CTA index* was up 14.05% for 2008, making this the 9th consecutive year of positive performance. The worst year was in 1999 with a negative return of -1.19%.

For the month of March we saw a negative return for the Barclay CTA index coming in at -1.03%** putting the index at a -1.46% YTD. The Discretionary Traders Index was the best performing of the CTA indices while the Diversified Traders Index was the weakest.

Assets under management are close to record highs for the managed futures industry, sitting at $206 billion at the end of 2008. The AUM for 2008 was just slightly lower then 2007 which may be surprising to some, seeing the positive return for the year. We attribute this to investors dipping into their profitable investments for profit taking, or to raise cash in this difficult economic environment.

At Wisdom Financial we continue to see an increase in assets allocated to managed futures investments and we believe it will only continue with the need for diversification, transparency, and liquidity going forward.

Past performance is not indicative of future results.
*There are currently 494 programs included in the calculation of the Barclay CTA Index for the year 2009, which is unweighted and rebalanced at the beginning of each year. To qualify for inclusion in the CTA Index, an advisor must have four years of prior performance history.
**Performance includes 72.54% of reporting CTA's as of 4-14-09

This month I had the pleasure of speaking with Bob Pardo of Pardo Capital. Mr. Pardo's program began trading in June of 1999. Last year Mr. Pardo managed to earn a return of 142.02% for 2008 and 804.78% since inception. Recently the program has seen a pull back and it is currently down -22.65% YTD. Since inception the program has seen a peak to valley drawdown of -40.01%.

W- Bob how long have you been trading in the commodity markets?

B- On and off since 1987, but full-time since 1996

W- What first got you interested in the markets and trading?

B- Watching the markets move when I first worked on the floor in 1976 got it started. However, this budding interest was really given a boost when I worked for Salomon Brothers and had a chance to watch John Meriwether (later of Long Term Capital) and his group trade.

W- What are your thoughts about commodities versus equities specifically in the current markets conditions?

B- I don't ever think it is an absolute either / or proposition. As a matter of fact, I spent the better part of today (3/12/2009) putting on stock positions for my family and for PCL.

That being said, there are clearly two things that one can say about futures. First, they add an excellent diversification element to a portfolio of stocks and bonds. For example, XT99 has a -.2126 correlation with the S&P and a .2016 correlation to T-Bonds. Also, given the relatively high returns that futures can offer -- due to leverage and fast price movements -- it can prove to be quite a yield enhancer. XT99 produced a +142% return in 2008, a year where stock indices were down as much as 50%.

Secondly, a well managed futures program provides the most direct way to take advantage of global macro-trends. For example, it presents direct, "undiluted" access to the profit potentials presented by directional moves in stocks, interest rates and currencies, to mention a few of the more noticeable horizons.

W- Given the current economic environment, what markets do you see potential in over the next few months?

B- I believe that we will see significant trends in all global markets with stock indices, interest rates and currencies leading the way.

W- In January we saw a lot less trading from CTAs. Did you experience this with your own program?

B- Yes. It is part of the structure of our algorithms to lighten up on positions and to not initiate new ones when markets have very little directional movement or chop around as they have to some extent the last two months.

W- Have you had to change your trading approach or discipline in the conditions?

B- No. However, this does not mean that we are "asleep at the wheel." We are continuously exploring new algorithms and risk management as well as new trading horizons in a very intensive manner.

W- Do you have any advice for investors looking to add commodities to their investment portfolios?

B- Do so but do so with great caution, discipline and with eyes wide open. If an investor lacks the time, aptitude or skills to trade the fast-moving futures markets, it makes the most sense to seek out professional help from a CTA or other asset management professional

W- Thanks for your time Bob.

B- Always a pleasure

Past performance is not indicative of future results. This program is only availabel to QEP's. Request a complete performance report and disclosure document here.

Wisdom Financial Inc. has launched a new CTA database at www.wisdomfinancialinc.com. The new database contains hundreds of CTAs, with the latest technology to search by returns, minimums, ratios and more. The database also gives you the ability to set up an automatic watch list for your favorite CTAs. PDFs are now available as well.

Due to the new database pin code system, current registrants will need to reregister for a pin to access the system.

click here to get your new access pin

CTA Scout

While looking for new talent we came across the following new programs and have added them to our radar.

Kingsway Capital Management LLC
The Kingsway Capital Management Trading Program employs a predominantly technically driven approach to trading across diversified futures markets by blending shorter duration volatility driven trades with longer duration calendar spreads.

It utilizes a proprietary risk management overlay and whilst heavily systems based, the trading program does have a discretionary element, for instance in trade exit and risk management.

The trading methodology is designed to be the optimal combination of the discipline which tends to come from technical systems, combined with real world oversight when required, to counter the extreme drawdowns that can be characteristic of purely technical systems.

The trading models are designed to profit equally from appreciating or declining markets.

Request a complete disclosure document and performance report here.

The CME has recently released a few new pieces that I believe are worth reading. The first is on the John Litner Study, "Lintner Revisted: The Benefits of Managed Futures 25 Years later". In this paper the CME attempts to update Professor Lintner's work by demonstrating the beneficial correlative properties of managed futures presented in his research persist today. You may download the brochure here or request it be emailed to you.

In Closing

We hope you have found the newsletter to be of value and look forward to being your first choice for managed futures information.

Wisdom Financial is an independent introducing broker with multiple clearing relationships, offering managed futures consultation, direct access trading, and trading system execution services to individuals, corporations, and industry professionals. Latest WFI News

Futures and Options trading involve substantial risk and is not suitable for all investors. Past performance is not indicative of future results.