CME Group Magazine is designed to keep you up-to-date on developments that can enhance your successful participation in the dynamic derivatives industry. Published quarterly, the magazine features customer case histories, new product information, technology updates, trend stories and news briefs.

Customer Connections
Managed Futures Funds Fly High

Managed futures funds outperformed hedge funds in 2008 and do well in times of unpredictable price swings because customized trading algorithms can react to market reversals that human traders may be slower to accept.

In 2008, one of the few bright spots in investments was the performance of managed futures funds. With more than $225 billion under management, the managed futures industry racked up gains of 13.9 percent in 2008, according to the Barclay CTA Index.

“Managed futures have delivered because they represent true diversification,” says Tom O’Donnell, first vice president of the alternative investments group at Newedge, the world’s largest futures commission merchant and a leading multi-asset broker.

“Managed futures managers invest in a globally diversified portfolio of liquid, exchange-traded assets comprised of stocks, bonds, currencies and commodities. They’re not organized around the principles of buy-and-hold, or beta with leverage. These managers recognize that markets move in two directions, and they have the ability to invest long and short in order to profit from market trends.” ...

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FROM THE TOP
Just a few weeks ago, Barack Obama was inaugurated as our 44th President of the United States. The Obama administration has cautioned that there are no quick fixes to the ongoing economic and financial market crisis – including its own economic stimulus plan.

However, it is clear that we will see a change in direction in how the United States approaches economic issues and financial markets, as well as other key areas of concern.

In this issue of CME Group Magazine, we look at several areas where change is imminent. While we do not have a crystal ball, we do offer the insights and opinions of many well-regarded economists and analysts, as well as customer perspectives, about the changes that are on the horizon. In particular:

• “Dawn of a New Era” investigates recent trends in financial markets and what may lie ahead in the wake of the continued financial crisis.
• “Metals Resurface” provides an overview of the metals market and the potential opportunities in gold and other precious metals.
• “Trading Green” looks at the role our Green Exchange initiative will play as the U.S. emissions markets mature.

While we continue to work through the challenges of the current market environment, this often painful situation also represents a unique opportunity to reshape financial markets for the 21st century. There has been much discussion about the role of regulation, or lack thereof, in the financial crisis and how the markets should be structured going forward. Last year demonstrated that the exchange model is a regulatory model that works, even during the most stressful market conditions.

Regardless of what is ahead, CME Group stands ready to work with our customers, providing them with the innovative risk management products and services, the security of CME Clearing and the strength of our CME Globex electronic trading platform and our trading floors.

Terrence A. Duffy
Executive Chairman
Craig S. Donohue
Chief Executive Officer

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