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Linn-LaSalle Why Managed Futures? For Internal Use Only
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Industry Challenges Competitive pressure for lower commissions Electronic trading (reduces client dependency on brokers) Internet access to markets and market information Difficult markets
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Why Brokers should sell Managed Futures? Chart: The Barclay Group
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Profitability of Managed Futures Chart: The Barclay Group
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Why Brokers should sell Managed Futures? Reoccurring stream of income Income is not dependant on market’s conditions More consistent business growth and better profit margins on commissions Broker’s income increases 1)as client assets under management grow and 2)with the profitability of clients accounts
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Why Brokers should sell Managed Futures? More stability of assets under management. Access to additional capital sources. (IRA’s, Pension Funds, Profit Sharing Plans) Become an asset manager with a reoccurring income More independence and more control over your time
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Sources of Income Upfront Fees Commissions from Trades Commissions increase with account profitability
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Gross Commission for Managed Futures Total after 1 st year Total after 2 nd year Total after 5 th year Money under Management $1,200,000$2,400,000$6,000,000 Upfront Fee (3%)$36,000 Trail Commissions (average 3% of Money under management) $36,000 $72,000 $180,000 Total Gross Commissions$72,000$108,000$216,000
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Wallwood Consultants Currency trading specialist Trades the Euro, the Yen and the U.S. Dollar Short term, systematic methodology
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Chickasaw Capital Systematic, global diversified strategist The Basic Diversified Program participates in the above 7 market sectors in varied weightings
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Commodity Capital Specializes in agricultural futures, options, and spread trading Discretionary methodology based on fundamental analysis and historical market relationships Relatively low margin to equity/ low volatility advisor
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BC Capital Specializes in S & P 500 Options Sells Credit spreads Rules based methodology
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CTA Fact Sheet For Internal Use Only--Not For Distribution Information not Guaranteed and Subject to Change. See Disclosure Documents CTA Wallwood Consultants, Ltd. (Wallwood Forex Managed Accounts) Commodity Capital Inc. (Futures Trading Program) Chickasaw Capital (Basic Diversified Trading Program) BC Capital Management (Indices Trading Program) Average Annual Rate of Return (Net Fees) 20.4% (4 years; does not include incentive fee)15.5% (20 years)22.15% (7 years)14.16%(6Years) Largest Drawdown (peak to valley) 32.27%(April 03-Aug 03) 23.68% (Mar 87-Jan 88) 34.28% (Sept 99-July 2000)42.31%(Jan 01-Mar01) Minimum Account Size $50,000 $100,000$50,000 Markets Traded FX (euro, yen and dollar) ag intermarket & ag intramarket spreadsGlobal DiversifiedS&P Options Methodology SystematicDiscretionary Systematic Trend FollowingSystematic Margin to Equity Ratio 15-25%5-10%25-35% CTA Management Fees 0% 3% (Monthly 1/4 of 1%)2% (Monthly 1/6 of 1%) CTA Incentive Fees 20%( $250K) (1/4 based on New Net Profits) 23%(Quarterly based on New Net Profits) 20% (Quarterly based on New Net Profits) Total monthly fees (Including CTA Management Fees, commissions, sales fees, and clearing) 0.46%0.67%0.610.68% Upfront Fees *This administration start up fee is not reflected in the performance record of the CTA.. Trading profits after any CTA fee charges, equal to the administration fee, will have to be achieved for accounts to break even. 2-4% 0.0068 IRA Qualified NOYes Required Paperwork Man Capital LLCMan Financial Updated Disclosure Documents and 1-Pagers see website
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