As you look for investment ideas to diversify your portfolio, you probably will hear more and more about managed futures funds. Over the past 30 years, funds deposited into managed futures accounts have skyrocketed past $130 billion, causing a rapid increase in its popularity among investors.

What is the reason for this astronomical growth?

For the first time in over 60 years, the stock market has had a 3-year return decline and has not achieved its highs from 1999. Many failing corporations have been the result of the current economic conditions, and this uncertainty has the potential to turn equity markets volatile.

Futures markets are uncorrelated with equity markets. Many trading professionals believe this makes futures an effective diversification strategy. Numerous studies show portfolios that are diversified with managed futures may have more stable returns over a period of time.

A managed futures fund is optimal for an individual not looking to trade; they want to use futures solely as an addition to their current investment portfolio. Managed futures accounts are similar to a mutual fund. An investor deposits funds with a Commodity Trading Advisor (CTA) who will fully manage the trading and risk from within the account.

When searching for a CTA to invest with, you have to find one who has a trading style that matches your tolerance for risk. It is highly advisable for investors to find a CTA who operates different funds to match different levels of risk tolerance. Then, of course, always review the fund's prospectus and historical returns.

THERE IS A SUBSTANTIAL RISK OF LOSS INVOLVED IN FUTURES TRADING AND IS NOT SUITABLE FOR ALL INVESTORS.