What are managed futures?

Managed futures refer to investment vehicles that are actively managed and typically involve investing in futures contracts across various asset classes, including commodities, currencies, and financial instruments. These investments are usually structured to be available to accredited investors, often as part of a hedge fund or similar investment vehicle.

Active management in managed futures is a key aspect, as portfolio managers use strategies that may involve both long and short positions depending on their market outlook. This flexibility allows them to take advantage of market movements and manage risk more effectively compared to more passive investment strategies. As a result, managed futures can provide portfolio diversification and potentially enhance returns by tapping into different markets and asset classes.

In contrast, the other options describe different investment approaches. Investing in real estate through pooled funds focuses on physical property investments, while a buy-and-hold strategy in equities entails a more passive approach, holding stocks over the long term without frequent trading. Lastly, passive fund structures that track commodity indices typically do not involve active management. Hence, the nature and definition of managed futures align specifically with the characteristics of actively managed investment in futures, validating the selection of that choice.