|
Disclosure Documents Investors interested in a managed futures program which is not exempt from providing such, must review and sign off on the commodity trading advisors Disclosure Document. www.solomon-layb.com The disclosure document (or D-Doc) includes an agreement whereby the client authorizes the CTA to direct trading in the client's commodity account, and outlines certain risk factors general to managed futures and specific to the advisors program. The disclosure document also discloses any and all management and incentive fees as described above to be charged to your account by the CTA. Notional Funding, Transparency, Liquidity A characteristic unique to managed futures accounts is the ability to use notional funding to trade. Because a futures trade requires only posting a performance bond with the exchange equal to roughly the amount of money that position could lose in a day, there is often a large difference between a CTA's required minimum investment amount and the amount which technically needs to be in the account to cover the performance bonds, or margin. This opens up the possibility of being able to deposit $50,000 to trade as $100,000, for example. One caveat, you will still be charged fees on the notional balance ($100K in our example), and those will be a much higher percentage of your actual balance ($50K in our example). Transparency & Liquidity with solomon-layb.com Two big advantages a managed futures investment has over a commodity pool or alternative investments in vehicles such as hedge funds or real estate is full transparency and nearly instant liquidity. Investors can see all of their positions marked to the market at all times, and should an investor need cash for any reason, wires can be processed the same day if received by 11AM. Tax Benefits Managed futures accounts are taxed based on their value at the end of the year. This is good news for investors, as futures gains or losses are treated as 60% long term capital gains and 40% short term capital gains, NO MATTER the holding period. For example, an investor who holds a futures position for just a few minutes, or hours, can book 60% of the profits on that trade as long term gains - even though the trade was anything but long term. What a deal! There is also no trade by trade accounting in futures, no wash sale rules, and losses can be carried back three years on futures based investment www.solomon-layb.com
Related Articles -
www.solomon-layb.com, solomon-layb.com, solomon, layb, technology, economical, financial, finance, business, job, career,
|
