A CIRO-registered portfolio manager is considering adding a managed futures strategy to a client's diversified portfolio. This strategy typically involves taking long and short positions in global futures markets, including commodities, currencies, and fixed income. Which of the following is the primary benefit sought by investors allocating to managed futures?

Question: A CIRO-registered portfolio manager is considering adding a managed futures strategy to a client's diversified portfolio. This strategy typically involves taking long and short positions in global futures markets, including commodities, currencies, and fixed income. Which of the following is the primary benefit sought by investors allocating to managed futures?

Answer options:

• High correlation to traditional equity markets
• Guaranteed positive returns in all market conditions ✅ Diversification and potential for crisis alpha
• Consistent income generation through interest rate differentials

Correct answer: Diversification and potential for crisis alpha

Explanation: Managed futures offer diversification due to their low correlation with traditional assets and can potentially provide 'crisis alpha,' performing well during periods of equity market decline when trends emerge.