Observations/Commentary

CTA Survey 2015
FOW Magazine
Calling all CTAs!
FOW is seeking your views on which service providers have excelled during the year for our International Awards.
Please take a minute to fill in this brief three question survey.
One entry picked at random will receive a $100 Amazon voucher.
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Rick Tomsic, Tradovate – Building with Vision
JohnLothianNews.com

“You don’t need 20 years in an industry to have vision. Some of the best ideas come from a unique vantage point. Your vantage point… it’s not jaded. You don’t know how futures technology may be used. You may look at it from a fresh alternative.”

The first step down an unknown path takes guts. But if you’ve calculated your risks, you have a chance for outsized rewards. For Rick Tomsic, CEO of Tradovate, that step meant leaving an established position in a managerial program for an eat what you can kill broker gig. A step further down the road and Tomsic occupied a 12 foot by 12 foot office in a house sporting a gigantic satellite on its roof, sweating buckets due to the large monitors while working his 10 phone lines. But it was what he needed to do to fulfill his eventual goal of building trading technology. In this video, Tomsic imparts the need to maintain your drive by both having fun and maintaining your vision.

Watch the video at MarketsWikiEducation.com »

Managed futures: Will they thrive with higher interest rates?
CFA Institute
When will the US fixed-income market shift into a secular bear market? –
In 1981, the 10-year Treasury peaked at close to 16%. Since then, the US fixed-income market has more often than not enjoyed a bull market over the past three decades (Here is an excellent New York Times article from 1981 that shows a completely different perspective on the future of yields).
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The Future of Alternative Asset Management
Bloomberg
Bloomberg’s Guy Johnson sits down with Guy Hands, Chairman of Terra Firma at the Bloomberg Markets Most Influential Summit in London.
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Altegris Futures Evolution Strategy N Is Crushing the Market-Kiplinger
Kiplinger.com
Altegris Futures Evolution Strategy N (symbol EVONX) is one of the few no-load futures funds with a low minimum ($2,500). It shined over the past year, beating Standard & Poor’s 500-stock index by 16 percentage points. “Trends that run and persist, such as the strengthening dollar, weakening euro and yen, and declining crude oil prices, have been great opportunities,” says Matt Osborne, co-president of Altegris Advisors.
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Gross Takes PIMCO to Court: Funds to Stay Safe
www.nasdaq.com
Last year around this time, bond investor extraordinaire William Hunt “Bill” Gross had shocked investors with his sudden exit from Pacific Investment Management Company (PIMCO) to join Janus Capital Group (JNS).
A year later, our prediction and media reports have proved that Gross’ exit was indeed the result of mounting tensions in PIMCO. Last week, the billionaire bond investor sued PIMCO and is claiming damages worth at least $200 million.
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China Seeks More Control Over Algorithmic Trades Blamed for Rout
Bloomberg
Chinese regulators are planning to increase their oversight of algorithmic traders, extending a campaign to stabilize the equity market that some analysts say has resulted in shrinking volumes and an exodus by foreign investors.
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Lead Stories

Hedge fund lobby hits back at automated trading’s critics
Financial Times
The hedge fund industry’s lobbying group has released a report seeking to explain and defend computer-powered, automated trading, after rising concerns that it exacerbated the recent market turmoil.
The Managed Funds Association, which represents hedge funds, so-called “CTA” futures funds and other systematic investment groups, pointed out that many types of investors utilise and benefit from automated, algorithmic trading techniques, and argues this is a boon to markets, reports Robin Wigglesworth, US markets editor.
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Fund managers say commodities rally not backed by fundamentals
Vanessa Desloires, Sydney Morning Herald
Since September 29, the mining sector has gained 14 per cent, while oil and gas stocks are 17 per cent higher.
The stunning rally in commodity-related stocks on the Australian sharemarket may be a sign investors are becoming comfortable with the outlook for China, but the underlying challenges facing the sector remain, fund managers warn.
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Efficient Capital Management Announces Strategic Relationship with Maren, LLC
Press Release
Efficient Capital Management, LLC, a leading provider of managed futures strategies to institutional investors, announced today that it has launched an initiative to make its sophisticated managed futures strategies and services available to a wider group of investors through its proprietary trading platform.
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Brynjolfsson’s Armored Wolf to Shutter, Become Family Office
Bloomberg
John Brynjolfsson, the chief investment officer of Armored Wolf, said he is closing the money management firm to outside investors and converting it into a family office that will oversee his own wealth, after its largest fund was hit by the slump in commodities.
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LSE’s Assault on Europe’s Futures Giants Leaves the Shadows
John Detrixhe – Bloomberg
London Stock Exchange Group Plc for the first time confirmed that it will start a futures exchange to compete with the entrenched derivatives markets owned by its rivals Deutsche Boerse AG and Intercontinental Exchange Inc.
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Ex-Jefferies duo banks on futures beyond metals
Melanie Burton – Reuters
Two Hong Kong-based metals veterans have set up a broad-based futures brokerage to tap into an expected boom in East-West investment, as a commodities downturn drives investors to seek new markets.
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U.S. Commodity Funds Goes Against The Grain
Tom Lydon – ETF Trends
At first glance, the USCF Stock Split Index Fund (NYSEArca: TOFR) would appear to be a niche exchange traded fund, but a deeper examination reveals some merit to the product.
TOFR is the first non-commodities ETF courtesy of U.S. Commodity Funds, the ETF issuer behind popular commodities ETFs, such as the United States Oil Fund (NYSEArca: USO), United States Natural Gas Fund (NYSEArca: UNG) and the United States Brent Oil Fund (NYSEArca: BNO). [An ETF for Split Stocks]
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Managed Futures/Managed Funds

Hedge funds wrong-footed by grains data – but profit on softs
Agrimoney.com
Hedge funds were wrong-footed in grains by Friday’s Wasde report, taking more bullish positioning ahead of a briefing deemed bearish for prices.
But on soft commodities, speculators got in ahead of bull runs in coffee and sugar.
Regulatory data showed that in the week to last Tuesday, managed money, a proxy for hedge funds, raised its net long in futures and options in the top 13 US-traded commodities by more than 167,000 contracts, the biggest turn bullish in positioning in three months.
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Can Hedge Fund Returns Be Replicated By ETFs?
valuewalk.com
If an investor can find actual alpha in a hedge fund investment they should be willing to pay 3 percent (management fee) and 30 percent (incentive fee), Nikki Tippins, managing director and head of Americas equity derivatives distribution at Morgan Stanley said during a liquid alternatives panel discussion at the Morningstar ETF Conference. However, acknowledging that hedge funds who can outperform a benchmark offer significant value, she said if alpha can’t be found “don’t pay 2 percent / 20 percent for something that can be replicated.”
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30 Hedge Funds join the Top Mid-Tier Hedge Funds List; Led by Catalyst Capital, Seatown Holdings and Redwood Capital
Press release
The Top Mid-Sized Hedge Funds now oversee a combined $69.6 billion in assets, according to Hedge Tracker’s most recent rankings. This quarter’s list is led by GEM Realty Advisors, a real estate-focused fund based in Chicago, Illinois.
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The Folly of Battling Activist Investors
HedgeTracker
Contributed by: Derek D. Bork, Thompson Hine LLP
There is no question that shareholder activism has steadily grown over the past decade and is now widely seen as the “new normal.” Hedge funds that focus on shareholder activism seem to be emerging all the time, and hedge funds that have been around for many years are now more than ever willing to engage in shareholder activism.
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There’s an ETF for that: Industry sets record
Exchange-traded funds are expanding their quest to take over the investing world.
www.cnbc.com
The $2.1 trillion industry already has set a record in 2015 for fund creation with 2½ months to go. Some 231 new funds have been added as of Wednesday to the increasingly diverse stable of vehicles that look like mutual funds but mostly follow indexes and can be traded like stocks.
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Arrow Funds Provides First-Time Mutual Fund Access to DUNN Capital Management, Commodity Trading Advisor (CTA) Pioneer
Press Release
Arrow Investment Advisors, the advisor to Arrow Funds and ArrowShares, is pleased to announce that it has partnered with DUNN Capital Management, LLC to make institutional-style investing more accessible. The Arrow Managed Futures Strategy Fund (NASDAQ: MFTNX), a 1940 Act mutual fund, now offers exposure to DUNN’s award-winning World Monetary and Agriculture (“WMA”) program. Established in 1974, DUNN manages approximately $1 billion in assets and represents one of the managed futures industry’s oldest firms, with a track record of producing a high composite rate of returns over time relative to its peers.
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Catalyst Launches Hedged Commodity Fund And IPO Fund
Seeking Alpha
Alternative specialist Catalyst Funds launched a pair of mutual funds on October 1: The Catalyst Hedged Commodity Strategy Fund (MUTF:CFHAX), an alternative commodity fund, and the Catalyst IPOx Allocation Fund (MUTF:OIPAX). As indicated by their respective names, the Hedged Commodity Strategy Fund provides investors with hedged exposure to a broad range of commodities, while the IPOx Allocation Fund invests in the stock of new public companies.
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Just 1pc of fund managers have beaten the stock market since Black Monday
By Kyle Caldwell – www.telegraph.co.uk
A fund that aims to mirror Warren Buffett’s investment style has beaten the FTSE since Black Monday, but the vast majority of active funds have lagged behind
Fund managers have struggled to keep pace with the stock market since the “Black Monday” sell-off, with just 1pc managing to outperform the index.
Research from FE Trustnet, the analyst, found that a mere three funds out of 258 that invest in British shares had outperformed the FTSE All Share index since August 25, the day after stock markets around the world registered heavy falls.
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A Look At Commodity ETFs Best Week In Years
ETF Trends
As the markets anticipate the Federal Reserve’s near-zero interest rate policy will be here for a while longer, we are back in a risk-on environment, with commodity-related exchange traded funds breaking out.
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Pensions & Institutions

Illinois comptroller: cash crunch will delay pension payments
Reuters
Illinois will have to delay a $560 million November payment to its pension funds, and may also delay or reduce a similar payment in December, state Comptroller Leslie Munger said on Wednesday, blaming a cash crunch stemming from the state’s budget impasse.
“The fact is that our state simply does not have the revenue to meet its obligations,” Munger told a news conference in Chicago.
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Pa. looks for a way to pay for its pricey pension plan
www.philly.com
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Phoenix says pension scammers moving on to Sipps and Ssas
www.ftadviser.com
Phoenix has reported its prevention £26m of pension fraud to date, with almost £2m worth blocked since pension freedoms were introduced in April.
The UK’s largest specialist consolidator of closed life funds identified 1,650 suspicious companies or schemes which it believes are involved in scams.
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Regulation

Bridging the Week: Aggregation, Cybersecurity, Wash Sales, Fund Redemptions, IB Records, CTA Registration
The National Law Review
CFTC Revises Aggregation Proposal Related to Position Limits
The Commodity Futures Trading Commission revised its November 2013 proposal related to the aggregation of accounts in connection with its speculative position limits requirements.
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CFTC fines CTA $140k for trying to pass off hypothetical trading as real
Automated Trader
Washington, DC – The U.S. Commodity Futures Trading Commission has issued an Order filing and settling charges that Barbara Cohen of Tarpon Springs, Florida, made false statements of material fact to CFTC staff and that the website of Cohen’s company, Pure Reason, promoted Pure Reason’s trading software by demonstrating profitable trading results without disclosing that these results were based on hypothetical, and not actual, trading. The CFTC Order requires Cohen and Pure Reason jointly to pay a $140,000 civil monetary penalty.
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