Andrew Abraham

andy-0101 My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.

Contact Details

If you are interested in contacting for speaking engagements. Please email me at or call 954 903 0638.

Books Worth Reading

Sponsored Listings

Risk Warning

Futures and commodity trading involve substantial risk. The evaluations of futures and commodities may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by, that you will profit, or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible, where projections of future conditions are attempted.



Trend Following CTA abraham investment management
Binary Options
Learn Forex Trading Online
Get a grip on forex trading with this free online course.
Tax Software

The Advantages and Disadvantages of Allocating to a Commodity Trading Advisor

The Advantages and Disadvantages of Allocating to a Commodity Trading Advisor

First of all allocating to a commodity trading advisor does not necessarily mitigate the inherent risks in commodity trading. Personally after allocating and investing with commodity trading advisors for years there are only a small group of commodity trading advisors that I have allocated to or would even consider in the future when they have their inevitable draw down. The title commodity trading advisor is not a guarantee of professional service or profit potential. Once you do find a commodity trading advisor that fully understands risks, has a well thought out robust plan and has the discipline to follow the plan you have the basis to begin.

It is preferable to have a managed account. However with that said you are personally liable for the account. As a pose to a fund you do not have the personal liability. Managed accounts give you the most transparency and liquidity. The reality is that long time success commodity trading advisors usually have large minimums in the millions. Your other choice is to enter into their limited partnership or fund. This is somewhat of a risk as all trades are culled together as well as your money is pooled. The standard for the majority of commodity trading advisors is 2% management and 20% of the profits. I personally have allocated to several managers that charge 25% and negate the management fee. The basic fact that I have experienced over the years the gross the returns of many of the commodity trading advisors that I have allocated to is they gross in the range of 18% to 21% overtime. This nets me in the range between 13%-15% over time. As an investor in commodity trading advisors we are paying for a service and personally it has been worth it. I have heard from many investors that those fees are too high and not worth it. Really what does it matter as long as you make your return? There are even managers such as Jim Simmons from Renaissance that charge even more & yet investors scramble for them to manage their money. The other reason I allocate to groups of commodity trading advisors is to spread out my risk in all types of ways. Firstly anything can happen and the idea of Refco always sticks in my mind. Even though the accounts were segregated there were issues. More so there was the cash management company in Chicago that blew up also. Some not so risk averse commodity trading advisors put their cash there in order to try to earn a couple of extra basis points and lost tremendous amounts of money. I like managers to keep the liquid assets of their fund in Treasury Direct which is basically leaving your money at the FED. The next idea of allocating to groups of commodity trading advisors is that even if the commodity trading advisors are in the same trades…they seem to get in and out at different times thus they have different returns. Another reason allocating to commodity trading advisors is that they might trade different markets. For example as we all know, there are always bull & bear markets in all types of markets. I allocated to a commodity trading advisor that included in his portfolio was Malaysian Palm oil. For what ever reason Palm oil took off and this one trade made the commodity trading advisors year as well as benefited me. Palm oil was not one of the markets that I trade in my models. As well there are commodity trading advisors that trade all types of currency crosses. This is another area I do not trade however these crosses open me up to potential profits that I would not have taken personally.

Allocating to groups of commodity trading advisors attempts to spread out my risk as well as my returns.

The converse of allocating to groups of commodity trading advisors is to do all my own trading. Possibly one benefit could be that I do not have to pay management fees and incentive fees ( I do not care to pay in order to potentially garnish positive returns). To me this is a minor issue. Even in my own trading models I just spread out the risk. There will be years that I under perform the managers I allocate to as well as years that I will out perform. However when you look at it in the big picture over 10 or 15 years it all balances out and smoothes out.

In my opinion if someone has the liquidity and even the knowledge, patience and discipline it is still worthwhile to allocate to groups of commodity trading advisors to smooth out the returns. There are always risks and our job as investors & traders is to attempt to mitigate them.

Trading futures and options involves substantial risk of loss no matter who is managing your money and is not suitable for all investors. Past performance is not indicative of future results.

Andy Abraham

Be Sociable, Share!
Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea Digg Diigo DZone Facebook FeedMeLinks Fleck Furl Google Google Reader IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare MyStuff Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext Plugin by

Leave a Reply




You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>