By: Dan Collins

There was an odd story in the Financial Times last Wednesday titled, “Quant hedge funds hit by US bonds sell-off.”

It was odd in that it treated a rather obvious observation as something more ominous and didn’t seem to have an understanding of the industry they were writing about. It further identified the “quant hedge funds” as “so called CTAs.”

Someone needs to inform the FT and the author Sam Jones that CTA is a term of art, a regulatory designation meaning Commodity Trading Advisor (CTA). These CTAs trade futures contracts through various strategies on behalf of customers to hopefully earn positive returns similar to equity based mutual funds. Unlike mutual funds, however, CTA programs are absolute return vehicles that do not rely on positive equity performance. CTAs can go long or short a variety of futures markets across numerous sectors including fixed income, currencies, equity indexes, energies, livestock, grains, metals and soft commodities.

Here is what they need to know. A large portion of the CTA universe is made up of…

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