Roland Austrup is CEO and CIO of Integrated Managed Futures (“IMFC”) and the longest-standing CTA in the Canadian marketplace. In this episode of Strategic Investor Radio, host Charlie Wright interviews Mr. Austrup, who explains the advantages of adding managed futures to an investment portfolio.
What are managed futures?
Mr. Austrup explains that the strategy involves investing across multiple asset classes – commodities, currencies, and financial indices – through the futures market. His firm, IMFC, uses quantitative analysis to select long and/or short positions across those asset classes based on value, momentum, and yield. He says his specialty is assessing those characteristics in underlying markets.
The popular perception of futures is that they involve concentrated bets, use a lot of leverage, and are thus very risky. When Charlie asks Mr. Austrup if this is true, he says it’s actually the opposite: professional managed-futures managers’ returns are more stable than the broad stock market, and it’s their objective to create portfolios with very stable, uncorrelated returns.
Because they invest both long and short across a total of 63 markets, Austrup’s IMFC has the potential to make money during periods of market stress. Indeed, bull markets and bear markets are good for managed futures – only the transitional period between them poses a particular challenge.
When asked what keeps him up at night, Austrup said “the unknown unknowns.” Chief among them: the unknown impact of greater assets coming into the managed-futures space, as more people start using active strategies rather than passive strategies.