2020 CTA Challenge — August Commentary

What Is A “Discretionary Commodities” Investment?

I am so glad that you asked. There are many types of investment programs in the liquid alternatives space, each using their own combination of data inputs, human skill and computer assistance to trade financial markets. One of these is the Discretionary Commodities subclass of investment programs. To better understand this investment program subclass and its management style, let’s break out the components.

Discretionary investment programs are controlled/traded by humans. Whereas systematic investment programs are controlled/traded by computer algorithms.

Commodities refer to a basket of physical goods that can be traded in bulk in raw physical form on financial exchanges, typically using futures contracts. Example of these would be Coffee, Wheat, Lean Hogs, Frozen Concentrated Orange Juice and Gold. There are hundreds of commodity products traded on futures exchanges, encompassing all types of base food products (grains, meats, softs, consumable liquids), precious and industrial metals, energy products and even lumber.


Billy Ray Valentine (Eddie Murphy) receiving an explanation from Randolph Duke and Mortimer Duke on “what are commodities?”.

Photo credit: Trading Places (movie) Paramount Pictures, 1983


A Discretionary Commodities Trader is a person (or team) that participates in the commodities markets, either directly or by using leveraged instruments like futures contracts, to bet on the rise or fall of commodity prices. Some trade only one or two markets while others trade a wide variety of markets. These traders use current and historical price analysis, supply and demand information (regional and global), geo-political situations, weather analysis, transportation and storage information, headline news and good old fashion rumors to make decisions on whether to buy, sell or hold (and how much) of specific commodities.

The secret sauce is the trader’s own recipe on how, why and what to trade in hopes of making profits in their account. The trading program might only be used in the trader’s own personal account or the program is offered out for investors to participate in the P&L steam (thereby offering a Managed Futures investment program with a Discretionary Commodities approach).

These investments are typically offered through Managed Accounts or through a Fund vehicle to the qualified investing public. Typically Discretionary Commodity investment programs have high minimums, anywhere from $10,000 to $1,000,000 USD, use leverage, exhibit high volatility, can make large profits but also carry the risk of losing more than the initial investment amount.

With hundreds of these investments to choose from, each with its own unique return stream and market thesis, it is best for a potential investor to consult an informed broker or specialized research firm that can weed out the good from the bad and the ugly. Cue the CTA Challenge and Coquest Advisors (our research arm). The Coquest team specializes in routine in-depth analysis of these investment products and determines which we feel have the best risk/return profile for the current market environment. In addition, we will work with interested investors to see if one or more of the programs is appropriate for your portfolio and risk tolerance.

To better navigate this landscape, interested investors should contact a Coquest representative with any questions on accessing Managed Futures.

Please note that Managed Futures investments and trading in futures, in general, can carry leverage and a high degree of risk. It is not suitable for all investors. See the full disclosure notice at the bottom of this newsletter. And, as always, past performance is not indicative of future results.

Contact Us:

Are You An Investor Who Wants To Know More?
To learn more about the CTA Challenge participating investment programs, or others that are performing well in this current environment, please contact Coquest by clicking here or calling 1-214-580-4220.

Visit: CTAChallenge.com for more details.


2020 CTA Challenge:

Top 5 Ranking Through The End Of June

#1: AG Capital Investments LLC / Discretionary Global Macro Program
#2: Breakout Funds LLC / Breakout Strategy *QEP*
#3: Revolution Capital Management LLC / Alpha Program *QEP*
#4: Cayler Capital LLC / Systematic Diversified Energy Strategy *QEP*
#5: Metolius Capital LLC / Diversified Systematic Global Macro *QEP*

See the full current rankings here.

CTAs interested in participating, or investors interested in learning more about CTAs and Managed Futures investment strategies, should contact Coquest and the CTA Challenge by clicking here.


Featured CTA

Opus Futures LLC offers its Advanced Ag Futures Trading Program, a discretionary managed futures strategy. The program’s primary focus is agricultural commodities, specifically grains and oilseeds. Trading Principal Mr. David Zelinski has gained a thorough knowledge of these markets while working with Nesvick Trading Group as a research analyst. Mr. Zelinski has traveled the country studying crop development and US cash grain and oilseed markets. Opus Futures’ fundamental analysis includes forecasting US and world supply and demand tables, monitoring US and world weather, studying domestic and international freight values, and tracking underlying cash values associated with agricultural futures markets.

Visit CoquestTradersResearch.com to learn more about this CTA and to become a premium member of the site.


Featured Sponsor

Nesvick Trading Group (NTG) partners with several commodity trading advisors. NTG began working to develop CTAs in 2008, and has since aimed to cultivate some of the premier programs within the managed futures space in the industry. NTG currently works with over eight CTAs that trade primarily in grains, livestock, equities, and currency markets. Each are different in their trading styles in the hopes to have a product to meet anyone’s specific risk parameters.


Upcoming Events – Mark Your Calendars!

MFA Forum 2020
September 9, 2020
Virtual Conference, Chicago, IL


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