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CBA’s asset management unit Colonial First State is combining with a London based company and will begin offering managed futures to retail investors once the exclusive domain of high net worth individuals and institutional investors.

Colonial First State will begin selling managed futures products that are managed by Aspect Capital to retail investors in New Zealand and Australia.

Managed Futures are essentially scaled down versions of hedge funds which take either long or short positions in futures and or cash markets and can profit from both upward and downward price trends in asset markets such as equities, commodities, currencies and others.

A futures contract gives the trader the ability to buy and sell financial or physical assets at a specified future date for a price specified in the present and are usually standardized contracts that are trade on an exchange.

Financial advisor’s tend to argue that managed futures products give the investor the ability to raise their level of diversification, that is to say invest in assets whose price movements are unrelated to one another.

Some of the risks relate to transparency, leverage and foreign currency exposure.

CFS chief executive Brian Bissaker said: “Back in 2008, just about all asset classes went down in value — property, equities, bonds — whereas a number of managed futures funds, including the funds run offshore by Aspect, went up.

“That’s not to say they are always going to go up in value, but what it does do over time is provide you with a diversification away from equity markets.”

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