Traders Exclusive: Dan Collins on Due Diligence

From the floor of the CME group Dan Collins, Traders Exclusive Contributor discusses managed future, diversifying your portfolio and the importance of due diligence. Collins says an investor must know who you they are investing with and how much they are paying for it. To emphasize the importance of due diligence he gives the example of the National Futures Association banning the FCM vision from membership because they raised assets for ACE investment strategists. Yu-Dee Chang was charged with misallocating $2 million of customer funds.He uses this as an example to show how popularity is not always a good measure to value an investor by. ¿He urges investors to check the fee structure and break even cost before making an investment. Collins says ACE investment strategies had a large load fee and the break even analysis was over 20%, which does not make a strong investment. He also adds that a strategy for low volatility is not necessarily a good one because it can add fees and sometimes double management fees because of higher leverage. High volatility is not bad as long as everything is exposed.

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