Mutual funds that use managed futures have grown dramatically in popularity, but the SEC is troubled by their leverage — and that troubles the industry
Investing in a mutual fund is relatively simple for all groups, but mainly for the retail public who want access to a wide variety of largely stock-based funds for a minimum investment and hopefully get some upside in a diversified number of markets. Several years ago, the managed futures business worked out a method to provide funds with a derivatives twist.
It confounded the Securities and Exchange Commission at first, and then as the number of these funds grew, it meant comprehensive legislation was needed. When the Jumpstart Our Business Startups (JOBS) Act was passed in 2013, it gave credence to these derivatives-based “’40 Act” funds, and they grew astronomically. Tempest in a Liquid Alt Teapot?