Commodity Pools

Many large institutions as well as numerous individual investors throughout the world now include managed futures positions in their portfolios. These positions can be in the form of commodity pools or individually managed accounts at an FCM. A private commodity pool or public commodity fund operates much like a stock or bond mutual fund in that investors with limited resources or time can purchase diversified investments that are professionally managed. As with mutual funds, a number of commodity pools are sponsored by major brokerage firms. However, in many cases commodity pools provide significantly more leverage than stock mutual funds. Commodity pools also provide limited liability to their investors, since the risk of loss is no greater than the amount of capital invested. This contrasts with an individual futures account, including individually managed accounts, in which the investor can receive margin calls and lose more money than was initially deposited.