Disclosure DocumentThe disclosure document is required to be provided to you if you are considering investing with the CTA. There is a wealth of information in the document that covers:
- Background information on the CTA.
- Trading plan and strategies that will be used to manage your funds.
- Rate of return the CTA has experienced in previous months and years.
- Fees that the CTA charges to manage the account.
This information will give you a good idea if this is the right investment for you. Most CTAs require a minimum investment of $25,000 and manage accounts into the millions. They typically charge a 2% yearly fee to manage the account and share in 20% of the profits they make on your account.
Past performance will be a key factor you use in choosing a CTA. You will want to see the returns that have been made in previous years and look for consistency. Some CTA’s will have high returns for a couple years in a row and then have a devastating loss the following year. It’s a safer bet to pick a CTA who has steady profits every year.
There are some good sources you can use to research CTAs and compare their performance.
Autumn Gold – they have a free service that shows the 2-month returns of top 100 CTAs and includes their profiles.
CTA-Index - free subscription to their service of more than 400 pages of profiles and top 20 CTA rankings.
The Barclay Group – excellent source of information on CTAs. Requires a free sign-up.