Commodity Trading Advisors (CTAs): What is their role?

Commodity Trading Advisors are no longer viewed as just Portfolio Managers. commodity trading companies His role has expanded considerably as investment products become more complex.

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Commodity Trading Advisor at Genuine Trading Solutions is a CTA registered with the CFTC. He says that the role of a CTA today is always changing.


Dwayne Strochen, the President of Genuine Trading Solutions, says that a Commodity Trading Advisor used to be satisfied with being known as a portfolio manager trading commodities and futures in a managed fund. It is clear that today's investors are more sophisticated. As a result, the selection of investment options has grown more complex. This makes it even more important for CTAs to be familiar with the management and use of these products.


So what exactly is the role of today's Commodity Trading Advisor. Trading derivatives for a managed fund of futures continues to be important. A CTA has also become more involved with derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.


The use of derivative analytics to manage the adverse risk of an equity or bond portfolio brought about by adverse market conditions is critical in preserving asset growth. The uses of hedging to prevent volatility has long been understood by the largest institutions but is now available to the smaller sized company and to the individual investor. As products continue to develop, the CTA will also evolve to meet the needs of today's professional manager.


Derivative products are no longer limited to exchange traded commodities futures and options. There continues to be an ever expanding list of over-the-counter derivative products. These are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. It is not always easy to find a buyer and a seller who are willing to enter into such an agreement. Second, there is no liquidity. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.


The role of a commodity trading advisor is not limited to just trading. Understanding the industry from a different perspective is essential to understanding the changing investment climate. The analysis is now the catalyst for adding a value-added service to retain clients. This includes structured products, risk management and OTC derivatives. The best in the business have always been known for their commitment to continuing education.