CTA EXPO LLC Presents:
Emerging Manager Forum Miami 2013

The Emerging Manager Forum at Hotel Fontainebleau in Miami Beach, Florida provides emerging hedge funds and CTAs from Europe, the U.S. and Latin America the opportunity to network and exchange ideas with capital sources from those regions looking for new sources of alpha for their portfolios.

EMF is designed with significant networking time for participants and sessions with topics that will benefit capital sources and managers. This is the 13th conference organized by CTA EXPO LLC. Emerging Manager Forum Miami, 2012, had over 260 registered including over 120 registered as capital sources and 42 trading firms.

Forum Program Includes:
The Alternative Industry… Where We Are, Where We Are Going
Moderator: Lana Keenan, ABN AMRO
Panelist
Ian Morley, Wentworth Hall
Mike Dubin, Silvercrest

Risk Measurement Tools..Are they Reliable
Alan Snyder, Shinnecock Partners

Alternatives… Manager Selection and Portfolio Allocation for Investors
Moderator: Carlos Cabrera, Jefferies Bache
Panelist
David Friedland, Magnum US Investments Inc.
Bob Swarup, Camdor Global
Ron Weiner, RDM

Washington and Alternatives… Where Are We Going Now
Andy Blocker

Global Markets and Investors Flows-Risk and Opportunities in Global Bonds, Equities and FX
Samarjit Shankar, BNY Mellon

Where are the Sophisticated Investor Allocations?
Grant Jaffarian, AlphaTerra, LLC

Achieving Breakthrough Investment Performance with Advanced Analytics
David Marra, Arialytics

VOODOONOMICS
Chuck Johnson, Tano Capital

Foreign Exchange… Is it an Asset Class
David Rodriquez, FXCM

4:30 pm – 6:00 pm Cocktails

Date: Tuesday December 3, 2013
Time: 8am to 6pm
Venue: Hotel Fontainebleau Miami Beach, Miami Beach, FL 33140

For more information and registration click here

By Mark Shore

In Part 1 of the article Five Ideas of CTA Due Diligence, we discussed several foundational concepts to keep in mind when applying a research due diligence process to a Commodity Trading Advisor.  At the heart of a due diligence process is to understand as much about the manager as possible.

A couple of years ago I met a journalism professor and I mentioned the students in my graduate level managed futures course at DePaul University write due diligence papers on managers. He said the due diligence process is very similar to how he teaches his investigative journalism students. Until he mentioned it, I never thought about it in those terms, but he was correct, it is the same process as investigative journalism and one can use similar techniques.

During the NIBA due diligence panel I was a part of on September 18, 2013 some of the audience questions included “how can a CTA properly prepare for due diligence meetings?” In this article we discuss due diligence from the CTAs perspective.

Preparation for due diligence meetings is very important for a CTA’s business development.  CTAs should understand a due diligence process is often more than one meeting or filling out one document, but is frequently a series of meetings over a period of several months or longer.

Below is a list of foundational ideas CTAs should be aware of for a due diligence process:

1) Properly explain the trading strategy and research process is an obvious task the manager must be able to do. You want the investor or client to feel comfortable in their understanding and expectation of the strategy.

2) During the NIBA due diligence panel discussion we talked about a growing demand from investors for CTAs to have audited track records. A CPA in the audience also confirmed that more of his clients are requesting their track records to be audited.

3) Since 9/11 disaster recovery has become an increasingly important component in due diligence. A plane crashing into a building such as 9/11 is a very extreme case. However, a more likely scenario is if the electricity goes out. Or if the manager has their business in Florida, how prepared are they for a hurricane? Do they have a disaster recovery plan? Where else can they trade from? Where is their data backed up? I’ve found disaster recovery is not often at the top of an emerging manger’s list of priorities.  

4) A due diligence process will often include a background check on at least the principals of the firm. This would include where the person claimed to have been previously employed or where they claimed to have gone to school.  The background check may also search for past criminal or regulatory issues. Ideally the due diligence process should not find any surprises in the background check.

5) Since Madoff there has been an increase to check for any operational fraudulent red flags. Who are your lawyers and accountants? The focus behind the operational aspects is about how well the manager can run the business.

I frequently receive calls from emerging managers regarding consulting and business development and over time they realize it takes an investment in their firm’s infrastructure and communication of their message to properly build their business.

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Copyright ©2013 Mark Shore. Contact the author for permission for republication at info@shorecapmgmt.com Mark Shore has more than 25 years of experience in the futures markets and managed futures, publishes research, consults on alternative investments and conducts educational workshops. www.shorecapmgmt.com 

Mark Shore is also an Adjunct Professor at DePaul University’s Kellstadt Graduate School of Business, where he teaches the only known accredited managed futures course in the country. He is also a Board Member of the Arditti Center for Risk Management at DePaul University.

By Mark Shore

In our last article Spreading European and U.S. volatility index futures, we discussed various points of how investors and traders could utilize spread positions between VSTOXX® Futures contracts traded at Eurex Exchange and VIX futures as a volatility index spread strategy. We thought it was logical to next examine the forward curves or term structures of these two volatility derivatives for similarities and differences with the goal of revealing potential trading opportunities between the two.

This article will examine several issues to present a more complete picture for readers. First, we will look at how each term structure moves under different market conditions. Second, we will present possible trading opportunities related to the differences between the term structures. Third, we will suggest reasons for the contango markets observed in both products. And finally, we will raise additional questions that will be answered in subsequent research.

For investors and traders liquidity is always an important component for trading a market. The liquidity of VSTOXX® Futures continues to increase as noted in Table 1.

To examine the term structures of VSTOXX® Futures and VIX futures, we looked at the average term structure of the two products under the following conditions to determine if the term structure of each changes in different market environments.
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Follow Mark Shore on Twitter, Facebook and Linkedin

Copyright ©2013 Mark Shore. Contact the author for permission for republication at info@shorecapmgmt.com Mark Shore has more than 25 years of experience in the futures markets and managed futures, publishes research, consults on alternative investments and conducts educational workshops. www.shorecapmgmt.com

Mark Shore is also an Adjunct Professor at DePaul University's Kellstadt Graduate School of Business in Chicago where he teaches a managed futures/ global macro course.  He is a Board Member of Arditti Center of Risk Management at DePaul University and an Adjunct at the New York Institute of Finance. Mark is a contributing writer to Eurex Exchange, Reuters HedgeWorld, CBOE Future Exchange (CFE) and Micro-Cap Review.

Past performance is not necessarily indicative of future results.  There is risk of loss when investing in futures and options.  Futures and options can be a volatile and risky investment; only use appropriate risk capital; this investment is not for everyone. The opinions expressed are solely those of the author and are only for educational purposes. Please talk to your financial advisor before making any investment decisions.