Today, a variety of academic research and evidence demonstrates the potential benefit of incorporating managed futures to create better balance to a stock and bond portfolio.

Although futures investments involve substantial risk and are not suitable for everyone, the general conclusion is that diversification of non-correlated asset classes, such as the introduction of managed futures to an investment portfolio, can both reduce portfolio risk and enhance overall portfolio performance.

Modern Portfolio Theory, introduced by Nobel Prize-Winning economist Harry Markowitz with his paper “Portfolio Selection” in the 1952 Journal of Finance, showed how to measure the risk of various securities and how to combine them in a portfolio to get the maximum return for a given risk.

The concept of Modern Portfolio Theory was further advanced by the work of Harvard professor Dr. John Lintner in his 1983 study, “The Potential Role of Managed Commodity-Financial Futures Accounts in Portfolios of Stocks and Bonds”.

His conclusions stated, “...The combined portfolios of stocks (or stocks and bonds) after including judicious investments in appropriately selected sub-portfolios of investments in managed futures accounts...show substantially less risk at every possible level of expected return than portfolios of stocks (or stocks and bonds) alone”.