Evaluating Managed Futures Managers With Mark Melin

Strategic Investor Radio Charley WrightIn this episode of Strategic Investor Radio, host Charlie Wright interviews Mark Melin, managed futures consultant, columnist and staff writer for ValueWalk.com, and author of three books on managed futures.

Growing up in Chicago, Mr. Melin says that most of his friends’ fathers were derivatives traders. Derivatives were the center of the financial universe from his perspective, and this background has served him well. Mark has 15 years of experience in the managed futures industry, and in 2011, he made the jump over to journalism. “I never realized I would enjoy a job as much as I do,” he says of the transition, adding that it has allowed him to “broaden [his] horizons.”

When asked by Charlie to give a 60-second definition of managed futures, Mark focuses on the managed part, defining it as professional management of regulated derivatives contracts. “Alpha,” in the managed futures world, doesn’t refer to beating the S&P 500, but being uncorrelated with it. Charlie says non-correlation is “more important now than ever these days after a 7-8 year bull run,” and that “in a bear market, the only thing that goes up is correlation.”

Mark Melin, Author and Columnist at ValueWalk.com
Mark Melin, Managed Futures Consultant, Author and Staff Writer for ValueWalk.com.

Mark says evaluating managed futures managers is his “sweet spot.” He breaks down the beta of each strategy into three primary components and numerous secondary components, and then evaluates individual managers across 38 primary points. Later in April, he’ll be launching an Algorithmic Newsletter Service, which will evaluate different non-correlated investments, in easy-to-understand terms, explaining how they work and analyzing the market environment.

When asked what keeps him up at night, Mark responds: “Sovereign debt and the derivatives surrounding it.” However, he thinks regulators are doing a good job addressing the problems surrounding sovereign debt, and that it’s “comforting” to see the system work, especially with so much money in politics. “It provides me with faith in our system of government,” he says.

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